Finextra Research: Latest fintech news, analysis, interviews, features and opinion by industry experts

Report

ISO 20022: How banks can avoid becoming a cautionary tale

Transitioning to the ISO 20022 financial messaging standard has been high on the agenda for financial institutions for several years, but as deadlines loom, the true advantage of early adoption means institutions are facing new pressure to migrate, and to do so quickly. By late 2022, institutions across the globe will have begun their migration to the new ISO 20022 financial messaging standard for high-value payments. SWIFT’s timeline delays have somewhat hindered the process for many institutions, but the project is resolutely on track for completion by 2025. The benefits of transitioning to the data-rich standard are well documented, but executing the migration itself is relatively new territory for financial institutions and the counterparties that transact with them. Financial organisations should approach their ISO 20022 projects with an honest view of the strengths and weaknesses of their existing infrastructure, so that avoidable mistakes remain just that. Download your copy of this Finextra impact study, produced in association with OpenText, and find out about four key areas that institutions must address when approaching their ISO 20022 migration to avoid unnecessary complications, and instead build an infrastructure that caters to a data-led, customer-centric future.

04 March 2022 604 downloads

Report

Will banks use digital security as a post-pandemic differentiator?

Banks large and small, old and new, have come a long way in a short amount of time. Prior to the pandemic there wasn't a bank or financial services provider worth their salt who did not have some kind of digitalisation strategy as a core part of their operations planning. The onset of the COVID-19 pandemic catapulted banks and their clientele into instantaneous cashlessness, forcing many organisations and customers to adapt at speed. A year and a half on, how much of this urgent transition will remain permanent is a key indicator of financial organisations’ success in responding to an unprecedented situation. Furthermore, whether the key pillars of trust and security upheld by banks have not only survived but positively thrived such that they stand taller and prouder, will be a key differentiator in a thoroughly modern banking landscape. These factors will illustrate how consumers and the industry have truly evolved as a result of unimaginable change. We take a pulse on these themes and questions by interviewing senior experts at several banking service providers across Europe and Asia. Download your copy of this Finextra report, produced in association with Feedzai, to learn more.

17 January 2022 376 downloads

Report

The Future of Digital Banking in Asia 2022

After the 2008 crisis, the financial services industry faced low interest rates, low credit growth, increased regulation, increased compliance requirements and a lack of trust from customers. This paved the way for banks in Asia to dominate the sector, surpassing the European and US banks that were formerly the largest by assets in the world. The financial crisis and the Asian boom threatened the traditional financial services industry and allowed fintech startups and platform-based companies, that prioritised competition to provide better services for the retail consumer, flourished. Alongside consumers opting to forego visits to bank branches, the more innovative players in banking focused their digital transformation efforts on the utilisation of information technology and big data to offer digital payments and advisory services. The speed at which these digital technologies were adopted was at a remarkable rate and this continued to accelerate amid the Covid-19 pandemic. Of course, Asia was ahead of the curve. While financial players in the region exhibited true disruption and extended banking services to previously underbanked segments of the population, traditional institutions on other continents were left with potentially obsolete legacy technologies, unable to serve the customers they had. To thrive in the future, incumbent banks must keep pace with the fintech newcomers and Big Tech players that have already started to gain market share in Asia. They can do so by leveraging application programming interfaces (APIs) which have enabled faster payments, simplified unbundling of services and improved data sharing for open banking. Also, cloud computing has supported the storage and sharing of data with the aim of improving customer experience and financial accounting in areas such as payments and credit scoring. Integration with mobile devices and digital wallets is equally crucial. In Asia, payment apps serve billions of users across the e-commerce, chat, delivery, food ordering and ride hailing industries. Globally, although Visa and Mastercard retain their lead in the transaction space, the likes of PayPal, Apple and Google are blossoming in the financial services industry. Further, as usage of cash declines, interest in digital currencies is increasing – with Alipay and WeChat Pay facilitating the introduction of cryptocurrencies and stablecoins in the corporate market. Banks now recognise that the route to digital transformation starts with digital payments and digital currencies, and the evolution of digital banking in Asia provides the blueprint for other regions searching for successful paths to innovation. This Finextra report, The Future of Digital Banking in Asia, in association with Infosys Finacle and OneSpan, explores these themes with commentary from Citi, DBS, livi bank, and Mox Bank.

22 December 2021 1017 downloads

Report

The Reinvention of Card Payments

Responding to Innovation: Where will the impact be? Payment innovation coupled with the pandemic's digitisation drive, is spurring card issuers to reinvent themselves. With the mushrooming options for consumers and merchants, it is challenging for issuers to navigate this landscape and know, with certainty, what the future will hold. It is crucial they get it right, however, since payments for banks and non-banks alike are a key touchpoint with the customer; they are the ‘in’ to a long-lasting - and profitable - relationship. Issuers must adapt to the increased expectations of the customers, which have shifted since the pandemic. Buying behaviour fundamentally changed once lockdowns went into effect, with in-person purchases plummeting and online sales skyrocketing. The pandemic gave the impetus that many needed to make the switch to contactless, and limits were increased. The contactless trend is set to continue. In Asia contactless is more likely to take off in developed markets, whereas QR codes are expected to take off in emerging markets. These trends, of course, are an acceleration of a shift that was already underway. The dwindling of cash has long been documented, along with the steady increase in electronic payments. And for issuers keeping track of the various payment forms, there is growth expected across the many types in the years to come. Download your copy of this Finextra report, produced in association with FIS, to learn more.

17 December 2021 1205 downloads

Report

Future-Ready Payments Solutions: Remaining competitive with reusable technology

Over fifty years ago, when the original payment pioneers built electronic funds transfer (EFT) platforms to enable card services, they had a single use in mind. Reliable and secure card payments were achieved, but the architecture was so closely bound to card transactions that it is now becoming incompatible with today’s colourful payment universe. As mobile and contactless payments, Quick Response (QR) codes, digital currencies, Request to Pay (R2P), Real-Time Payments (RTP), Buy-Now-Pay-Later (BNPL) and peer-to-peer (P2P) payment applications take off, banks are forced to build separate in-house silos, in order to process these new payment types. Given a plethora of dedicated systems are already in place to process cash, cheque and card payments, management of these silos and ‘add-ons’ is becoming a complex undertaking. Forward-looking banks are tackling this challenge by deploying modern payments platforms that are comprised of a set of re-useable services. These have the capacity to not only consolidate numerous payment schemes onto a single platform, but they can also future-proof businesses by facilitating easy adoption of new payment types. As the payments race heats up – and banks wrestle with the emergence of new digital currencies, payment instruments, funding methods and payment types – those with the most agile, secure, and reusable platform will be rewarded with a strong competitive edge and improved margins from being able to control when, how deeply and how long to take part in any new payments venture. Download your copy of this Finextra impact study, produced in association with Diebold Nixdorf, to learn more.

09 December 2021 788 downloads

Report

Facing up to the Future: Biometric Automation in Banking

The advantages of biometric authentication in banking over less secure passwords are now well understood. Biometric measures such as fingerprints and face verification not only help to reduce fraud and financial loss for banks and their customers, but they make transactions more convenient and faster for users. As a result, consumers the world over have become accustomed to the merits of biometrics. However, the use of biometrics is not without its challenges. The first of these is that wherever technology breaks barriers in terms of convenience and usability, so surely will fraudsters follow to find nefarious ways to breach new barriers of security. What remains difficult for the financial services industry is the live authentication that a verified identity is indeed a real person logging on in real time. Fraudsters are structured and organised, and impersonation can take many different forms. Banks need to be able to deliver a consistent yet flexible level of ongoing security depending on the risk profile of the transaction. Biometric authentication can provide a consistent yet flexible experience to make online banking simple, convenient, secure and inclusive to customers. Cloud-based services, as opposed to device-based authentication, mean attacks can be fixed faster and in an isolated fashion so as not to affect other parts of the system. They also facilitate faster and more comprehensive analysis of activity, which means any future potential attack can be addressed more quickly. This white paper from Finextra, in association with iProov, will explore the following points and more: The latest technologies available to banks to facilitate biometric ID verification and authentication The perception and preferences of banking service users and the current methods and techniques banks are employing How cloud-based biometrics can bridge the gap between now and the future of seamless and secure authentication services

12 November 2021 459 downloads

Report

Addressing the Poverty Premium: A data-led approach

Poverty premium is a term that means so much more than being charged more for certain products and lack of credit history; it can also equate to digital exclusion. With an increasing focus on environmental, social and governance (ESG) agenda, banks do not wish to be seen to be as socially irresponsible. Regulators and authorities are increasingly turning their attention to these issues as well, understanding that the poverty premium is a roadblock to regional and national economic progress. Banks therefore need to find ways to offer more nuanced services, so that fair banking is open and accessible to everyone. And this ultimately works to their advantage as well. Not all of the demographic that is let down by digital services is poor - think millennials without a credit history, or older baby boomers who aren’t digitally savvy- but by being unbanked or excluded from the system, can easily follow a downward spiral and end up badly off. There is scope and opportunity for banks to provide digital educational and coaching services as well, to bring people on board, better educate them and of course, avoid certain pitfalls. With shrewd capturing, processing and analysis of data and technology, banks can take the lead by addressing the tired bias that exists in traditional credit decisioning models against certain credentials or attributes, which is often a result of programming by human bias. Through open banking and shared data, particularly as this theme trickles into other sectors such as energy, insurance and healthcare, fintech startups and neobanks are already driving change in this respect. Download your copy of this Finextra white paper, produced in association with Cognizant, to learn more.

05 November 2021 295 downloads

Report

Competitive Advantage through Cloud Connectivity

Why NaaS is the smartest path to realising Financial Services Innovation in the Cloud. Many financial services firms are still making the shift from their legacy environments to more agile ways of consuming and running IT. Networking is one of the most critical aspects of this transition. It’s the backbone that connects all parts of an organisation and its data, as well as its wider ecosystem of partners, providers, and customers. The speed, reliability, and flexibility of the network directly impacts financial players’ pace of innovation, as well as their ability to provide highly available, customer-centric services. The challenges and limitations of traditional networking are clear in our virtualised, cloud-enabled, data-driven world. It’s slow to provision, expensive to maintain, lacks flexibility and integration, and can’t scale effectively to handle big data sets and analytics workloads. The need to modernise and simplify networks is an imperative for financial services organisations as their infrastructures become more complex and they develop their multi-cloud and hybrid-cloud strategies to support business transformation. Network-as-a-Service, or NaaS, enables financial services organisations to maximise the potential of the cloud as part of their digital transformation. It provides the future-proofed networking foundation that allows innovation and competitive differentiation. Download this Finextra impact study, in association with Megaport, to learn more.

06 September 2021 173 downloads

Report

Cost of doing business as usual or an avoidable drain on margin?

Operational loss events related to Execution, Delivery and Process Management (EDPM), and Clients, Products and Business Processes (CPBP) can represent the most financially damaging losses for banks. Yet these often fly under the radar of more PR-friendly talk around cybercrime, money laundering and fraud defences. There is relentless pressure for revenue growth, client acquisition and flow. But margin is just as important, if not more so. Every operational loss event that occurs because lessons have not been learned from previous failures, is a direct and significant hit to margin. While risk management departments might be aware of the scale of the problem, how many people working in data reconciliations, operations or IT could tell you the average cost of a loss event? How much focus is being directed from the board and C-suite to make sure that operations have what they need to improve data quality and flow, introduce intelligent automation and remove manual touchpoints and opportunities for failure? This Finextra white paper, produced in association with SmartStream Technologies, examines what more can be done to translate operational risk measurement into operational and financial margin improvements, and the barriers to overcome.

19 August 2021 193 downloads

Report

Stemming the tide of Social Engineering Scams with Behavioural Insights

Fraud and cybercrime are always on the increase, evading the latest security conventions and morphing into a different approach, following the money. In the same way, banks and financial organisations worldwide need to continuously respond and adapt. Global events create new trends and directions for fraudsters to exploit and the recent Coronavirus pandemic is no different. Social engineering fraud has gripped the industry in the last year and in particular, phone and business email scams seem to be resulting in the highest losses; indeed, according to the US Federal Trade Commission, 77% of fraud complaints reported by consumers in the US involved contact by phone. In the UK, it is more commonly referred to as Authorised Push Payment (APP) fraud, and while measures have been introduced, such as the Contingent Reimbursement Model (CRM) code and Confirmation of Payee, to protect consumers and to detect and prevent scams and illicit funds transfers, more needs to be done in the UK, and globally. The good news is banks can access and utilise increasingly sophisticated technology and expertise to meet the fraudsters’ aptitude, analysing behaviour patterns, for example, to uncover social engineering scams. Behavioural insights can be used to inform new strategies and respond to attacks in real-time where other security controls have failed. With large losses becoming increasingly publicised, and hence reputation brought into question, the industry must respond, and it is incumbent upon all players to collaborate and be proactive around accountability and prevention. This research paper from Finextra, in association with BioCatch, explores the recent uptick in social engineering attacks globally, and how banks can respond using the latest technology and security measures.

06 August 2021 223 downloads

Report

The Future of Payments 2021

The Road to Successful Digital Transformation. Every player that operates within the intricate ecosystem of financial services is at a tipping point. The pandemic deeply entrenched the digital agenda, especially for payments, and financial institutions recognise that the effects of Covid-19 are likely to have a permanent impact on the industry. Tink1 found that 74% of European banks see an increased need to enhance their digital services, and 65% believe that banks must increase their speed of innovation. This immense pressure to digitise is being played out across the globe, as regulators and industry bodies scramble to expedite timelines for the modernisation of payments systems. On top of this, technology firms and fintech startups have never been more innovative, leaping into action to capitalise on the opportunity the pandemic presented and shepherd financial services into the new digital world. Embedded finance is answering the demands of consumers, and incumbents are eager not to lose their footing by investing heavily to innovate and evolve. Open banking has taken hold in several jurisdictions, and in certain circumstances, is flourishing into the more expansive open finance. Ultimate success will depend on fundamental impediments such as incumbent banking cooperation, consent mechanisms, and concerns around privacy being managed or removed. Certainty around digital identity is predicted to bolster not only the momentum toward open finance, but to build on the capabilities required to deliver a central bank digital currency. 2020’s upheaval of brick-and-mortar retail led to the soaring uptake of e-commerce and a shift in payment trends, as contactless transactions became the norm. While the efficiencies of this new digital world have been exponential, criminal activity has naturally followed, and financial institutions are having to protect customers from sophisticated fraudsters. New forms of crypto assets further complicate the situation, especially as regulators attempt to balance the need to regulate alongside the need to foster innovation, all the while attempting to protect consumers from new forms of harm. The opportunities, however, are myriad in nature. The seemingly unquenchable appetite for the potential new technologies hold payments modernisation appears to be outpacing the historically risk-averse financial services sector. With expert views from Banking Circle, Nuvei, and Thunes, in this report, you will learn from industry leaders about the events and trends defining global payments into 2021 and beyond. The report includes insights from BNY Mellon, Citi, Deutsche Bank, ING, J.P. Morgan, Metro Bank, Nationwide Building Society, Open Banking Implementation Entity, Plaid, Rabobank, Raiffeisen Bank International, Société Générale, and SWIFT.

23 June 2021 1436 downloads

Report

The advantage of Machine Learning in preventing fraud

Accurately identifying customer behavioural trends and proactively preventing payments fraud and other criminal activity at the outset can be done with machine learning. Ingesting tens of thousands of complex signals and analysing patterns to monitor activity is more effective than blocking transactions based on hard-coded and antiquated rules. Fraudsters can learn to circumvent these, and trusted users are put at risk, which is why embedded machine learning algorithms can be valuable. Download this Finextra impact study, in association with Sift, to learn about: Payments fraud and how machine learning is being leveraged today, Account takeover fraud, the biggest future threat to banks, and Synthetic ID fraud, the next opportunity for machine learning.

17 June 2021 390 downloads

Report

Identity verification’s integral position in evolving digital transformation

Eliminating friction by enhancing onboarding processes with efficient identity verification is of paramount importance to the success of a financial institution. While data can bolster streamlined onboarding and verification, it can also support the delivery of actionable insights for the creation of personalised services. This establishes a comprehensive view of the customer, increases loyalty, boosts sales, and generates revenue. Therefore, in an increasingly competitive market, the transformation of user experience must be prioritised, and identity verification is central to that objective. Download this Finextra impact study, in association with Jumio, to learn how to: Establish a competitive edge with efficient onboarding, Reduce abandonment rates, Utilise biometrics, facial recognition, and AI, Ensure a positive, seamless user experience.

15 June 2021 326 downloads

Report

Five Business Benefits for Analysing and Combatting Fraud

A Finextra Research Impact Study in association with Aerospike. With increased financing options at point-of-sale, card-not-present transactions, and contactless payments, comes a resultant surge in fraudulent transactions and financial crime. This increase in digital fraud has been catalysed by the recent Covid-19 pandemic-induced shift to online banking and commerce. Now more than ever, financial institutions must implement payments authentication processes to prevent the long-term risks associated with fraud, including slimming margins and reputational damage. One way financial players can stay ahead is to analyse all available historical and real-time data, and apply artificial intelligence (AI) and machine learning (ML) tools – which encompass a range of algorithmic approaches that derive from statistical methods such as regressions and neural networks – to decipher legitimate transactions from the illegitimate. There are, however, five further business benefits to understanding customer risk profiles. Actionable insights derived from fraud profile analysis can help banks visualise each customer, not as a collection of disassociated data points, but as a mosaic, made up of different characteristics that merge to provide a comprehensive view. This can lead to complex, holistic, and predictive analysis of customers’ behaviour – generating consistent and tailored services. Download your copy of the paper below to learn more.

20 May 2021 218 downloads

Report

Corporate Onboarding: Will it become a competitive differentiator for banks in a real time world?

The way in which banks onboard corporate clients can impact many aspects of their business, from reducing time to revenue, to improving customer experience and loyalty, and to compliance with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations. The accuracy of data used for onboarding customers is therefore a key differentiator for banks. Relying on primary source data that is legally compliant contributes to compliance peace of mind, while banks can make better decisions based on compliant data that is 100% accurate and continuously updated. This is particularly important in the world of corporate onboarding, where vetting a company can be time and resource heavy, and a complex task with many moving parts. Accessing regulated and authoritative data from company registries to onboard a client in a timely manner is a complicated process that involves a series of manual checks. There are continual updates to regulations to comply with, such as the requirement for ongoing monitoring within the 5th Anti-Money Laundering Directive (5AMLD) as well as due diligence in ensuring that company data for KYC checks is up to date and accurate. From a business perspective, banks are keen to onboard new customers as quickly as possible to maximise income and profit. An efficient process can also be a crucial differentiator in procuring loyal clients for a lifetime of service. Expectations for a real-time experience are growing in the corporate environment, just as they have in the world of retail and consumer banking. This white paper explores how banks can deal with changing KYC regulations and the incoming 6AMLD; what technology can be utilised to assist banks achieve seamless corporate onboarding; and what stands to be lost, and more significantly, to be gained, with a seamless real-time onboarding experience. Download your copy of this Finextra white paper, produced in association with Kyckr, to learn more.

16 March 2021 758 downloads