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It may seem like a paradox, but as the devices people use to bank get smaller and smaller, the amount of data involved in those services gets larger and larger. So, with all that data already increasing so dramatically, what’s going to power the future of FinTech as the number of transactions made each day reaches high into the billions? The answer is the mainframe!

by George DeCandio, CTO, Broadcom

I’ve spent decades working with leading organisations in the financial industry, and in that time I’ve seen a lot of impressive innovations that have reshaped the FinTech industry (and financial services in general). Take the advent of online banking in the 1990s, or the rise of blockchain and cryptocurrency in the 2000s, and the introduction of online payments like Apple Pay in the 2010s. It’s worthwhile to note that each of these innovations – and many others – would never have been possible without a host of significant technological advances taking root ‘behind the scenes;’ advances that enabled the tremendous amounts of financial data associated with those innovations to be handled efficiently, effectively and reliably.

As any financial industry CIO will tell you, big data calls for the Big Iron… the mainframe. You might be surprised to learn that over the past 5 years, as more and more transactions happened through apps and online, the amount of financial data processed on mainframes has actually gone up. That’s right. Up! While an account holder might use an iPhone to pay a bill, there’s almost a 100% chance that the transaction was powered behind the scenes by a mainframe.

It’s easy for people to see just the consumer-facing technology and apps as modern and cutting edge while regarding other systems in the same way they might their parents’ wardrobe – dated. I’ll admit I have a few shirts in my closet whose best days are now long behind them, but that’s not at all the case with the mainframe. These systems aren’t out of date. They’re very much cutting-edge technology, continually growing in capability and keeping pace with the world around them.

Mainframes are fast – really, really fast

Thanks to their speed, security, and flexibility, today’s mainframes can perform a blistering six billion transactions a day. If you want to know why no banks reported system failures during the pandemic despite all of the stress that has been put on the financial system, there’s your answer. And these systems will continue to be even more vital as the world moves into a digitally powered future.

Thankfully, most of the mainframes that are in use today – including the powerhouse IBM z15 – are actually new. I know … whenever a movie character mentions the mainframe, invariably there is a massive room-sized computer laden with pneumatic tubes and steam vents that looks like it belongs in a Jules Verne novel. But more than 90% of major banks in the US are using a mainframe that’s less than two years old. Instead of envisioning the deck of the Nautilus from Verne’s Twenty Thousand Leagues Under the Seas, it would be more accurate to picture today’s mainframes among the amazing equipment in Tony Stark’s lab from a Marvel Avengers movie.

Then we get to flexibility. Just about every app and tool that people use to send money (ranging from Apple Pay to Zelle to PayPal) depends on the mainframe. If you really think about it, none of us have bank accounts with Apple, meaning that when we use an iOS app to transfer or access funds there needs to be an integration with one or more banks. And all those touch points involve mainframes. Just because consumers don’t see it, doesn’t mean it’s not there.

The backbone of FinTech’s future

Not only is Big Iron (the affectionate term that mainframe aficionados use to describe these systems) driving FinTech tools that are in common use today, but it is ideally positioned for emerging technologies including digital currencies, digital wallets, payment gateways, peer-to-peer lending, and microfinancing. I recently rented a beach house for a weekend on Airbnb, and I know for a fact that there was a mainframe involved in the transaction. Even Bitcoin touches the mainframe, which is amazing to think about. Emerging FinTech models may seem like strange bedfellows with a bedrock technology like mainframe, but the reality is that if funds are involved, the mainframe is ideally positioned to be the reliable technology backbone to make it safe, fast, and secure.

Bridging these two worlds is a new generation of open-source approaches and standards, making it so that literally anyone who knows how to use a computer can use the mainframe. That’s why the Linux Foundation has a major initiative called the Open Mainframe Project that is specifically designed to drive mainframe innovation. This gives traditional financial institutions an opportunity to mine the talents of cutting-edge app and platform developers to roll out services that would have been unfathomable to think about even five years ago. It all comes back to APIs, which give forward-thinking technologists ways to access the mainframe without having to buy their own machines or build completely new infrastructures to take advantage of their power and flexibility.

When most people think about innovation in the financial sector, they think about disruptive products such as PayPal and Apple Wallet. But while those applications get all the glory, they are the 10% of the iceberg that everyone sees. If you look closer, what makes it all work is the venerable mainframe, which quietly keeps the entire FinTech world, and indeed the financial sector in general, afloat.

Most people associate the word ‘blockchain’ with cryptocurrency and given the amount of press coverage the latter has received, particularly in the last two years, it may seem that the two are indistinguishable, but that is not the case.

by Mario Galatovic, Vice President Products & Alliances, Utimaco 

Blockchain is ultimately a means of storing information, no different in some respects from an Excel file, SQL database, or even a hard drive. The major difference is that this technology is distributed over a network of peers called ‘nodes’. Each entry in a blockchain contains a cryptographic hash linking it to previous blocks in a chain, meaning that once data is recorded it cannot be altered without altering all subsequent blocks.

Given their high level of security, blockchains have been mooted as a solution for a range of problems, and despite the ‘wild west’ reputation that it has due to some spectacular security breaches in cryptocurrency trading, major companies like IBM are using it in applications ranging from trade finance to vaccine distribution.

One key application that would solve a huge number of problems is that of identity: identity theft is a growing problem, and proving identity is a difficult task that places a huge administrative burden on companies and individuals. Before getting a loan, buying a house or starting a business an individual has to prove their identity, and this can be an onerous task, particularly if you are one of the 1.7 billion people in the world without a bank account, one of the world’s 82.4 million refugees or an undocumented migrant.

So how might blockchain technology help create digital identities, and how might they be secured?

Opportunities and challenges for digital identities on the blockchain

The idea of creating a secure digital identity isn’t new, but the need for it is becoming more pressing by the year, as more problems with our current system of disconnected digital and analogue documents certified by multiple authorities become apparent. A so-called ‘Good Digital Identity’ was one of the pillars of the 2018 World Economic Forum meeting in Davos, aimed at creating ‘a new chapter in the social contract’. Worldwide the market for identity services is expected to reach $14.82 billion this year, and the administrative and social costs of the difficulty of proving identity is impossible to estimate but likely to be much higher.

Real-world applications of this technology already exist: the UMHCR already uses blockchain technology to distribute food to refugees based on biometric data, and it is possible that the technology could be used to prevent the estimated $40 billion in corruption caused by aid not reaching the people it is intended for. Both applications depend on identity: being able to link a person’s iris scan to a ledger of when they last received food aid and being able to ensure that payments reach a particular person or agency and no others.

There are also uses for this technology that could become more widespread: international travel could be sped up considerably by having digital instead of analogue passports, as anyone who has lost a passport before travelling could tell you. Background checks when applying for sensitive job roles could also be done instantly as opposed to through contacting multiple agencies. Transferring healthcare information internationally, which often involves fax machines, would also speed up considerably.

Returning to the subject of cryptocurrency, despite the security inherent to storing financial information on the blockchain, many cryptocurrency users have either had their wallets compromised or simply lost the passwords for them because there is no way to connect that wallet to their physical identity. If you forget the PIN for your bank card it can be reset because there is always a ‘you’ to connect that account to, but if a cryptocurrency wallet that can be accessed with only a username and password is lost then it could be gone for good. A robust digital identity system could solve this problem.

How blockchain can secure identity

Blockchain technology is a sensible way to achieve a ‘good’ digital identity. Although there have been concerns about speed when applied in the cryptocurrency space, where making a payment or transfer can take considerable time as the blockchain works through a backlog, blockchain technology is potentially very fast, and being ‘centralised’ (in the sense of all being in one blockchain) means that auditing information will be much faster and tamper-proof. Being decentralised, an identity blockchain could be accessed from anywhere but would be extremely secure: for example, if you were applying for a loan online you could grant the lender access to the details they need and nothing more, just as when you sign up to a service with Facebook it will tell you that it will have access to your friends and so on.

When applying for a new job you could allow access to your work history but not your medical record, when having a check-up with a doctor you could grant access to medical records but not your work history. Because each granting of access would be a ‘transaction’ on the blockchain you would have oversight on who has access to which elements of your digital identity, and this system could even use smart contracts to allow time-limited or conditional access to certain records.

There is also the matter of security. Blockchain technology is innately more secure than other information storage technologies because of the very fact of it being a ‘chain’ – you cannot go back and alter a piece of information, deleting the record of a payment so that it ‘never happened’ for example. Although it would be very difficult, this would be hypothetically possible in current forms of data storage – your bank balance is effectively a number in a spreadsheet. Blockchain technology wouldn’t allow for this, making it ideal for highly sensitive applications like identity.

Of course, blockchains can and have been compromised, so they will need to be secured with similar technology to that which secures more traditional information storage. Public and private keys backed by strong, quantum-safe cryptography generated by hardware security modules will enhance the safety of blockchains and allow for the creation of secure digital identities.

Historically, accounting software has been designed to help finance teams manage time-costly tasks, improve accuracy, and counter the repetition of month-end tasks needed to close the books. The pitfalls of this approach and the focus on the ‘task’ has resulted in models that have made it more difficult for accounting professionals to rise above the numbers. In other words, software tools have traditionally placed an outsized focus on the minute details of closing tasks which have stymied accounting professionals, ensuring better accuracy, and visibility at the expense of a more analytical interpretation of the financial data.

by Mike Whitmire, Co-Founder and CEO, FloQast 

Conditions are optimal for software that provides a more elevated approach. A new trend emerging within the sector is that accounting is increasingly intertwined with and responsible for the business operations function. This occurs by virtue of the fact that accounting underpins the ability to operationally run a smooth department and, more importantly, the entire company.

Unquestionably, this trend has been accelerated by the pandemic, where teams have become remote and increasingly siloed from one another. In functions such as accounting, there is an important need for collaboration and transparency when it comes to completing functions around the month end. Controllers were faced with a greater challenge than ever before, how to maintain collaboration and communication remotely?

It’s no surprise, therefore, that the pandemic has also increased the need for cloud-based solutions to engender better communication across distributed teams. Tech of this kind has taken centre stage, proving its utility in enabling simple processes, such as end of the month, to be completed more efficiently, giving way for accountants to increase their focus on much needed strategy and agile thinking during such unprecedented times.

The use of artificial intelligence and machine learning technology has helped automate the ‘low hanging fruit’ functions with modern accounting software allowing finance professionals to apply their human intelligence to solving higher level problems. In essence, when the small stuff is automated, individuals can better see the forest, without having their field of vision obscured by the individual trees. However, in order to achieve this level of focus, it is important that the software used is intelligently designed to enable it.  At its heart, software needs to be informed by the people doing the job, in this case, the accounting team. This way it can address and solve the very real day-to-day challenges and become indispensable, whilst freeing up time of the controller to enable strategic thinking.

Taking the time to consider practical use cases and listening to customer challenges is also equally important for software design. Companies will often start using accounting software as a way to optimise accounting functions alone but may move beyond that, wanting more from their software. For example, by offering a way to collaborate and provide transparency around any process under the function of the controller.

Understanding and delivering on customers’ needs should be a fundamental driving force behind any accounting software and will lead to greater credibility for the product. Likewise, an ability to free senior finance professionals from the burden of repetitive, number-crunching tasks will enable them to open their eyes, offering strategic input to fuel improved decision making, and ultimately lead to stronger business performance.

When a human being or even an animal faces risk, there can be one of two reactions – fight or flight. Risk is inarguably ubiquitous and something that most of us deal with on a daily basis. However, rather than fight or flight, sometimes the best way to deal with risk is to buy protection. And, this is where the insurance industry plays an integral role.

By Vijay Kasturi, Head of Sales & Business Development – Western Europe at Profinch Solutions 

The insurance industry enables you to protect the downside of unforeseen events and mitigate the impact of risk events. Traders and mariners have been buying insurance for the last 500 years. Inevitably, the insurance industry has significantly evolved over this vast period of time and shape shifted in response to the changing environment. Today, the industry is in the midst of another important transition precipitated by technology and in response to changing consumer needs. It has finally started its delayed, but firm, march towards digitization. While digitization is being embraced across the value chain, its importance in claims management needs to be highlighted.

The digital claims value proposition

For an insurance company, the moment of truth comes at the time of claims processing. An efficient and timely settlement of claims can lead to a positive experience for the customer and help the insurer engender trust. Digitisation can help enable this in several ways. However, in the digital age, a truly robust claims value proposition needs to go beyond the traditional after-the-event claims management exercise. It needs to be holistic and foster an end-to-end partnership with the customer. This means digitizing the entire claims journey starting from digital claims prevention and digital first notification of loss (FNOL) to digital loss assessment and automated settlement, especially for clear and simple cases.

What does digitizing the claims process mean for insurers?

Automated and intelligent interactions can facilitate the faster settlement of claims.  Insurers can leverage Artificial Intelligence (AI) to create chatbots that can act as the first call of support for customers. These chatbots can address basic settlement queries and even commence the claims settlement process. For example, chatbots can easily avoid the need to check the policy number for identification by simply verifying it with the policy documents, photographs, and other documents submitted by the policyholder. Further, they can interact with the customer, assess the requirement, and then suggest the best course of action. A process that would normally take a number of days can be done in just a few minutes with the assistance of chatbots. The best part is that since chatbots are available round the clock, customers can interact with them and have their queries addressed almost as soon as the need arises. This can be invaluable to a customer who is looking to make a claim.

Machine Learning (ML), a subset of AI, can further augment the value being generated by automating a significant part of the claims process. Imagine this scenario – an individual interacts with a chatbot to initiate the claims process. At the back end, ML tools have already converted all the files and information into digital assets and made all the information available to the chatbot via cloud. The chatbot can now point the customer in the right direction. Next, data analytics and drone technology can be leveraged to assess or verify the damage for which the claim is being made. For example, the claimant can take a picture of the damage and share it with the insurer. Digital tools can then be applied to scan the picture, compare it to a repository, and verify the actual damage. Or, unmanned drones can be deployed in case of large-scale damage where individually assessing the damage might not be possible. With assessment done, settlement of small value claims can be automated while large value claims can be referred for further evaluation. With the entire process automated, it becomes more efficient and seamless.

It is important to recognize that automated risk assessment is actually the first step in improving the claims management process. AI can enable insurance companies to improve the risk assessment and underwriting cycle. Insurance companies can leverage AI and predictive analytics to access data related to the risk metrics of individuals rather than groups of people and assess it more efficiently, thereby improving the risk assessment and the claims cycle. According to a report by PWC, the initial impact of AI will primarily relate to improving efficiencies and automating existing customer-facing underwriting and claims processes.

Clearly, digitization of the claims process can be highly value accretive for the insurer as it leads to faster settlement of claims, improves the customer’s claim journey by making it more seamless and efficient, and helps in achieving cost efficiencies.

Today, the average insurance customer is already accustomed to digital interactions and is, in fact, demanding digital journeys in most spheres of their lives. For insurance companies, it has now become essential to holistically embrace digital solutions in order to meet the customer’s needs and thrive in the new normal.

Irrespective of where they are in the world FinTech companies are vulnerable to cyberattacks and deploying the kind of encryption and security technology that major banks use is costly and requires technical expertise.

by Eyal Worthalter, Vice President – Global Solution Sales, MYHSM by Utimaco

FinTechs are not just getting more customers and larger investments, but we are seeing new FinTechs founded in sub-Saharan Africa and cities like Tel Aviv, Stockholm and Hangzhou beginning to compete with traditional cities such as New York, London and San Francisco as major hubs of innovation.

Cybercrime is a global problem

Cybercrime cost the world $1 trillion dollars in 2020, more than the combined cost of all natural disasters and the costs of adapting to climate change, and this number is only going to rise. Data breaches can cost companies as much as $3.86 million and take as long as 207 days to discover. Some companies have been the victims of particularly damaging, headline-grabbing hacks: after 147 million people’s personal information was exposed in the Equifax hack the company spent $1.4 billion on security upgrades.

Although the global pandemic helped FinTech companies by showing many people that they could easily administer their financial lives from their phone and pay for goods and services without cash, it also drastically increased the amount and sophistication of cybercrime. At any time when there is a global financial downturn more people will turn to crime of any kind to make ends meet.

FinTech companies may seem like low-hanging fruit to criminals when compared to banks. Both keep and process customer payment data, but banks have extensive security operations – one survey shows that banks spent on average 10.9% of their IT budget on cybersecurity, and this is growing every year. FinTech companies will have the same challenges but significantly lower budgets, which leads to a situation in which criminals perceive them as weak and are more likely to target them, increasing their need for cybersecurity when they are least able to satisfy that need.

This is a particular problem for companies based outside of the traditional tech hubs, and even more so for startups in the developing world. There is already a skills shortage in the cybersecurity industry, and the limited number of experienced professionals know that they are more likely to get high-paying jobs in the world’s major tech hubs than those cities that are still developing their FinTech industries. This leaves the younger companies who need the most support without the critical skills that they need.

Cloud-based encryption can bridge the gap

Encrypting cardholder sensitive data such as PINs during online transactions is hugely important to minimise any fraudulent activity. The use of a Payment HSMs in the financial services industry is mandated by PCI Security Requirements and are a fundamental requirement to become PCI PIN compliant. However, Payment HSMs require significant investment and specialist knowledge to operate and manage. For these reasons, they may be out of reach for small start-ups and companies in the developing world.

Cloud technology has clear advantages for FinTechs and the recent pandemic has accelerated the use of cloud-based systems in the financial world and increased the use of cloud systems by FinTechs, 55% of which say they use multiple clouds. Cloud technology may be deployed quickly without the need for new hardware, it scales to meet surges in demand, backs up all of a company’s data and can often be paid for monthly rather than as a single expensive purchase.

Furthermore, cloud-based services allow smaller companies to deploy the same level of security and compliance that is used by much larger companies at a fraction of the price. This means that startups can focus on their core business knowing that security and compliance is taken care of, which in today’s cybersecurity climate will be a major relief for the company.

Technology that integrates a business’s accounting data directly into lending propositions – a practice that we term open accounting – can help mitigate risks for lenders while the demands and stress on borrowers are reduced.

by Kevin Day, CEO, HPD Lendscape

In respect to secured lending, where the lending is based on the accounts receivables of a borrower, open accounting provides accurate and up to date information regarding the collateral that effectively underpins the financing facility. It can help lower costs, reduce the friction in the process and enable more optimised funding, benefitting both parties in the process.

What is open accounting?

Open accounting is the process by which the financial records of a business are purposefully shared with a third party or lender via their accounting software, in order to speed up the lending process by finding all the reliable and up-to-date information transparently and in one place.

It offers an answer to several issues in SME lending. By granting permission to banks and FinTech lenders to the information contained in their accounting platforms, SMEs can receive more optimised lending propositions. Open accounting offers the promise of smoother access to working capital for SMEs and also allows lenders to create better, more flexible products and services.

Fighting fraud and smoothing out the lending process

A crucial issue lenders will face in a period of increased demand for financing is the rising risk of fraud. Indeed, each instance of receivables or supply chain finance fraud contributes to the vast $5 trillion lost to corporate fraud each year – a sum equivalent to the GDPs of Italy and the UK combined! Compounding this issue is the fact that lenders must often make do with out-of-date and incomplete client data that can slow down the process for borrowers and lenders alike.

It is here that open accounting can provide the answer.

Transparency and granularity of operation data available to the lender enables better risk management. For example, a business that traditionally operates during Monday-to-Friday business hours suddenly has invoices issued over a weekend. This circumstance may be due to legitimate reasons, but by being alerted to the fact, the lender can bring more scrutiny to bear should this be an indication of potentially fraudulent activity.

Helping to increase access for SMEs and agile businesses

Traditionally, SMEs might have avoided approaching banks for financing due to the difficulties they faced when dealing with large financial institutions and their often-cumbersome lending processes. It is not uncommon for smaller businesses owners and directors to be required to provide personal guarantees to secure lending. For example, using collateral like their own home is often a deterrent to borrowing due to the personal risks involved.

However, there has been a step-change in the way businesses and institutions embrace digitalisation that has the potential to change the dynamics at play. There is an increasing opportunity for trust and transparency between lenders and borrowers that open accounting can answer. Offering transparency into the day-to-day operations of a business removes the opaqueness that might otherwise exist. Can enhanced data quality provide sufficient security to the lender to enable it to waive protective covenants and securities it may otherwise wish to invoke?

Open accounting could help create a renewed attractive market for lenders to fund businesses that have lower boundaries to borrowing. In addition, this will help encourage better and fairer equity exchanges between borrowers and lenders while streamlining the customer journey by removing cumbersome processes for time-constrained businesses.

Overall, the Covid-19 pandemic has driven more demand for financing among businesses as they look to inject fresh liquidity and stave off the financial cliff edge many are facing now that government lending schemes are drawing to a close. With this change, more companies and financial institutions will look towards digital solutions that incorporate an open accounting approach to inform their lending. Greater visibility of a business’s data helps mitigate fraud risks and enhances lending propositions for those companies that may have been less likely to borrow before the pandemic. With businesses in more need of financing and liquidity than ever before, this can only be a good thing.

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

by Tamsin Hobley, Country Head UK and Ireland, SIX

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

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

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

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

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

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

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

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

by Dave Dabbah, CMO, CleverTap

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

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

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

Mobile wallet marketing in practice

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

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

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

Challenges in mobile wallet adoption

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

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

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

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

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

The bottom line

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

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

by Steven Weinstein, CEO, Seismic Capital Company

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

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

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

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

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

Micro ATM’s bridge the gap to get fast cash

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

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

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

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

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

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

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

Communicating regulatory change

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

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

The role of technology

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

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

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

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

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

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

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

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

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