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

Report

The Future of Digital Identity 2022

Inclusive, Secure, Fit For Purpose Digital identity will be the catalyst for financial institutions wanting to navigate the data ecosystem in an increasingly sophisticated manner. In addition to an equivalent or replacement to physical identity documents, digital identity has also become a way to provide verified personally identifying information (PII) for software to read and process. Alongside this, over time, digital identity is also being utilised to enhance privacy protection and reduce financial crime through authentication. While biometrics are now part and parcel of life in 2022 – with the prevalence of mobile payments with Face ID and Touch ID – the concept of real-time and frictionless processes is what is driving the future of digital identity forward. According to the World Economic Forum, good digital identity has five key components. These five components form the basis of this report: Useful Inclusive Secure Offers choice Fit for purpose With expert views from CGAP, Citi, EPAM Continuum, HSBC, KPMG, London School of Economics, Loughborough University, The Purple Tornado, and the United Nations in this report, you will learn from industry leaders about the events and trends defining digital identity in 2022 and beyond.

06 May 2022 1075 downloads

Report

Can you afford compliance?

Maintaining compliance for both regulatory and industry-driven standards is complex and expensive, yet fundamental to a financial institution’s ability to provide payment services. As the rate and complexity of compliance changes increase, financial institutions are constantly under pressure from regulators that are adopting agile principles designed to protect the evolving financial ecosystem. Financial institutions also have to balance the growth of modern instant payment rails, the need to support mandated overlay services, and the emergence of new and sophisticated forms of risk. For financial institutions, there is a difficult balance in managing compliance while investing in innovative, customer-centric and competitive capabilities. Further, as the speed of transition to a digital environment increases, so do regulatory and compliance requirements. While recognising the impact that managing and maintaining compliance has on a financial institution, an upfront assessment of applicable regulatory requirements - and integrating compliance with the overall digital strategy - allows financial institutions to minimise risk while providing a platform for building innovative business propositions. Benefits include protection from financial crime, information analysis and improvements to the customer experience – all driving growth while optimising regulatory obligations. The path to compliance and managing risk varies by the maturity of payments markets, with the approach taken in emerging markets being very different from mature markets in EMEA and APAC. This Finextra impact study, produced in association with Fiserv, explores five core areas of compliance that are challenging financial institutions today, and how combatting these concerns can orient institutions for success.

25 April 2022 458 downloads

Report

Payments Transformation: Emerging Stronger

The Finextra Annual Payments Survey Report 2022 in association with Fiserv We discuss findings from the survey on how financial institutions are continuing to grow and tackle emerging and disruptive competition while rationalising investments. There is a change in emphasis towards reduction - reduction in costs through consolidation; reduction in risk through a focus on financial crime; reduction in a one-size-fits-all approach; reduction in resources to address the increasing demands of customers, regulators and the payments industry. It demonstrates that there is a clear understanding of the benefits of consolidation of payment types, including operational and customer experience improvements. Progress to this goal highlights the trend towards outsourcing standardised processes such as payment processing to a capable and trusted partner, through the evolution to payments as a service, allowing the financial institution to improve its overall operational efficiency and customer propositions. Download the report of the results from the recent Finextra Annual Payments Survey, by Finextra & Fiserv, below to learn more.

10 March 2022 913 downloads

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

The Future of Embedded Finance 2022

Which European Stakeholders will Win or Lose? Momentum towards embedded finance has been building slowly but surely over the past decade, as demand for seamless e-commerce solutions push both financial and non-financial players to serve their digitally discerning customers more effectively. The arrival of Covid-19 and the significant shift in consumer behaviour served only to accelerate the growth of embedded finance solutions. With the unexpected global lockdown not only of brick-and-mortar retail, but of countries’ entire workforces, the economy was forced to operate differently, and the need for a digital, accessible world became more urgent. With significant market appetite and foundations for payments solutions already established, the pandemic laid fertile ground for embedded finance to become entrenched in the everyday lives of consumers. Brands around the world are now scrambling to strategise, develop, and implement their journey toward delivering more effective payment offerings to their customers. This new Finextra report, produced in association with Solarisbank, includes industry expert commentary from financial institutions such as BBVA, Illimity, Nomo, Orange Bank, and Plaid.

28 February 2022 1280 downloads

Report

The Future of Regulation 2022

From Innovation to Execution The fire for innovation in financial services has long been raging, and regulators, having transformed their modus operandi to keep pace with the force of technological change, are carefully approaching their role in the great rewiring of the financial system. The fear once invoked by terms like artificial intelligence, cloud computing, or data sharing, has been relegated to the past, and the role of technology in the future of financial services is now accepted as being intrinsic to its success. With Open Banking reaching new realms of maturity, players have begun questioning how best to measure its success in a post-pandemic world. While Open Finance edges ever closer to pulling all focus away from the original Open Banking objectives, innovators are looking for ways to unbridle all pretence tied to our traditional view of what finance should achieve. Instead, they are placing impeccable user experience at the centre of their offering. This unbridling is also becoming apparent in the burgeoning appetite for decentralised finance offerings by retail and institutional investors. Central bank digital currencies (CBDCs) inject another layer into this mix, as central banks and governments carefully weigh up the advantages and risks of diving straight into the opportunity they present. Regulators are caught in the middle of these rapidly evolving trends and forces, attempting to stay the regulatory course by ensuring stability and security, while also motivated to remain at the forefront of this technology. Resilience has never been a more important focus for regulators, who are shifting responsibility directly onto market players to ensure strength across intertwined systems. Selecting a handful of areas tied to fintech that are either ripe for, or undergoing seismic regulatory evolution, we’ve compiled a wealth of insights from industry experts who have shared their views on the changes we can expect in 2022. This new Finextra report features commentary from industry experts across a breadth of financial, technology and regulatory firms, which include contributions from Accenture; A&O Consulting; Bird & Bird; Change Gap; Coutts; Herbert Smith Freehills; Hogan Lovells; Plaid; Proskauer; P2 Consulting; McDermott, Will & Emery; Noll Historical Consulting LLC; Société Générale; State Street; and The DPO Centre.

07 February 2022 1110 downloads

Report

Getting tech right: Selecting the right software products to fulfil the digital demands of banking

While the global pandemic may have been a shock to the system for incumbent financial institutions, it only served to reinforce the growing pressure to digitally transform their operations. Thanks to rapid digitisation of services across industries the profile of the typical consumer is evolving into a far more sophisticated and demanding user. As a result of this evolution, retail consumers and corporate clients alike are hoping to leverage more from the relationship they share with their banks. While younger, digitally native financial institutions are well positioned to adapt and mould their offering in line with this shifting profile, incumbents weighed down by legacy technology and infrastructure are finding the pivot more challenging. Rather than resisting change, incumbents that accept that the ubiquity of big tech and the client-centric ecosystem are permanent, are likely to reframe their mindset into delivering consumer-centric services effectively. Download your copy of this Finextra impact study, produced in association with SunTec Business Solutions, to explore the key trends shaping the push toward a new financial services industry, and the key technologies that banks can deploy to evolve into more customer-centric institutions.

31 January 2022 422 downloads

Report

Open Banking Europe 2022 - What’s next for Open Banking?

Since the European Payments Services Directive 2 was introduced in 2018, open banking has come to mean different things to different participants. Progress, innovation and developments have taken place at varying speeds with varying results. In financial services there has been a flurry of new participants- quite as per the intention of PSD2- and between these, the banks and the often-conflicting, sometimes symbiotic relationships that have emerged, the customer has indeed been the recipient of a richer choice of services and providers. But it is still more limited than it might be. The end user- be that consumer or business customer- has notions of the concept of open banking generally only in the form of new services now on offer. And they have become more attuned to the value and proprietary nature of data. The customer relationship has become the holy grail, and yet no financial service can be launched or be delivered credibly without the unfaltering robust protection and compliance that only licenced banking organisations have the wherewithal to provide. Hence the need to increase access to banking rails for Third Party Providers (TPPs). To this end there has been something of a stalemate, because for many banks, the value proposition is still unclear and the question burns brighter by the quarter- do the relevant bodies need to galvanise efforts by introducing stronger direction regarding infrastructure and accessibility? Download your copy of this Finextra report, produced in association with Worldline, which takes the pulse on the development of open banking initiatives from several stakeholders through one-to-one interviews to ascertain where the biggest opportunities lie now and, crucially, what it will take for them to be fully realised.

18 January 2022 1330 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

Prepare to Choose: 4 factors Banks must assess before committing to a SaaS Provider

Most banks' digital transformation journeys are well underway, and the need to now deliver on their strategy milestones means that time is of the essence. A recent survey by The Economist Intelligence Unit (EIU) and Temenos found that just under two thirds of banks see new technologies as the greatest driver of change for the next four years, up from 42% from three years ago. While the momentum toward digitalisation of financial services has grown significantly during the past 18 months, financial institutions are increasingly recognising the value of Software-as-a-Service (SaaS) solutions in delivering new products and meeting customer expectations. Central banks are also increasingly showing their appetite for and recognition of the fundamental role of cloud-driven SaaS solutions in financial services. In mid-2020 the Bank of England announced its search for a technology partner to help build out its public cloud platform, while the Bundesbank recently began encouraging German banks to focus and adopt SaaS solutions enabled by cloud computing. Banks have refined their SaaS strategy beyond non-core offerings such as payroll or HR-related tools into more comprehensive, cloud-centric strategies. Covid-19 has served to accelerate adoption in core banking technology. SaaS is attractive to financial institutions looking for fast, agile solutions, because they are able to consume the required service instead of having to buy, install and maintain a suite of software independently. Rather than building in-house, financial organisations are looking specifically for resources that will speed up their attempts to innovate and scale at pace, and engender independence where suitable, all the while bolstering compliance regimes from the heart of operations throughout its entire API network. In order to have confidence that the correct SaaS provider is being selected, it is vital for banks to drill down and assess the factors which make SaaS attractive from a business perspective in the long and short term. Banks must consider whether its core offering will enable business continuity, optimise business outcomes and help the bank reach its regulatory obligations. Above all else, SaaS providers must provide certainty that their solution will not hinder or threaten business functionality in any way. This Finextra impact study, in association with Temenos, will outline four fundamental factors for banks when considering a SaaS solution, in order to position a financial institution’s business offering for success.

22 September 2021 512 downloads

Report

Corporate Mobile Banking and the Road to Omnichannel

Innovation is picking up pace in treasury management, but development is far from the fintech revolution that has replaced outdated technologies and streamlined antiquated practices in retail banking. While there is an appetite amongst treasurers to remedy historic shortfalls, continuous improvement in operational treasury efficiency has been the biggest hurdle. International payments continue to be an expensive and burdensome process, multi-currency accounts cannot be accessed, can only be operated manually, and take weeks to open – even though very few organisations operate using a single currency. Mobile banking can alleviate these pressures by removing geographical limitations and in turn, improving efficiency and productivity. Considerable time has also passed since supply chains and banks had to ascertain how to pool cash and conduct trade across multiple nations, currencies, and continents for the first time, which is unacceptable in this real-time age of payments processing. Mobile services can remedy these issues by accelerating collection, refining reconciliation, and eliminating a significant portion of risk. Here’s how.

23 August 2021 340 downloads