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

Report

Embracing Open Banking with Secure and Interconnected APIs

In financial services today, data is an asset. But only if it can be accessed, transformed and integrated securely into internal and external ecosystems. In the world of open banking the definitions of competitor, partner and customer are blurring. It is particularly important for financial institutions to have a cohesive strategy to manage the integrations that tie together their systems from back office to customer-facing channels. This needs to happen across lines of business and international operations, and be able to expose functionality and data to build innovative new services with third parties. Application Programming Interfaces (APIs) have become the most accepted method for building systematic connecting points between an organisation and the outside world. They are often used internally as well, alongside more traditional internal integration patterns such as file transfers and middleware. The widespread use of APIs has led some to talk of the “API economy” as a way to describe the new business models emerging. Large organisations are transforming themselves to compete and partner with new service entrants such as aggregators while start-ups create new businesses by combining functionality provided by APIs from multiple sources. There are many drivers for organisations to develop an effective API strategy. Within financial institutions from the board level down there is pressure to continually modernise and embrace digital transformation to optimise costs, become more efficient at developing new products and services and boost revenue from customers that expect better, faster, anywhere/anytime service.

20 December 2019 645 downloads

Report

How to Protect and Grow in the Fintech Industry

A 3-Step Guide to Generating Revenue and Becoming Profitable. A monetisation strategy must be devised so that the company can decide what value will be created and who will pay, whether it is the customer, thirdparties that want access to the consumer or third-party beneficiaries who can derive value from the user. There is no universal formula for success that can work across all business models. The most common way of generating revenue is charging consumers. This would work well in a startup model as these organisations are unencumbered by legacy infrastructure and cost structures, so new financial services entrants can charge fees that are lower than what customers are accustomed to paying, while at the same time, continuing to create better user experiences. However, untrusting customers want more than a better customer experience and companies need to establish revenue sources that can be diversified over time. Additionally, financial services providers must give their customers a reason to bank with them and this can be done by ensuring defences are built against financial crime, providing analytically driven decisions and streamlining the lending process. With this in mind, there are three important steps to be taken to proceed towards long term profitability.

09 December 2019 425 downloads

Report

How European Retail Banks are Riding the Wave of New Technology

Retail banking is in the midst of change and technology is driving transformation, connecting physical and digital environments. Incumbent banks, challengers and neobanks are also focused on developing online and mobile banking services to meet the needs of the consumer, like the chatbot for retail customers, a conversational banking platform that most financial institutions (FIs) have launched. What retail banks are doing is challenging the status quo by adopting emerging technologies to combat issues that traditional financial institutions have faced for decades. This is just a drop in the ocean of the digital transformation that is to come.

18 November 2019 746 downloads

Report

Digital Transformation in the Data Economy to Improve Threat Detection

The digital transformation of the banking landscape has changed the way financial institutions treat their customer data. Add in the introduction of open banking and the emergence of crypto assets and this change becomes even more profound. Customer data has become critically important in this new data-driven economy, as has banks’ ability to capture and analyse this data in order to improve both their own performance and their users’ experience. The creation of a more connected and digital banking market also makes this data more vulnerable to cyber risk and fraud. With the right technology and tools, however, the same data can be used to markedly improve banks’ fraud and threat detection. This white paper will examine the effect of these digital developments on banks’ capture, storage and use of customer data. It will also look at the need for heightened data security in the open banking environment, as well as the central role that banks can play in managing and protecting their clients’ digital identities. What emerges is a compelling requirement for financial organisations to connect the dots internally, to both maximise the business benefit of a heightened data, digital identity and threat detection strategy, and to merge the strengths of hitherto disjointed departments to aid this transformation. Cybersecurity and fraud departments, for example, need to be working together to create a robust and secure operation. Finally, the paper will argue that with the correct use of new and emerging technologies, banks can not only ensure compliance with relevant regulations but also improve their customers’ banking experience and their own standing in a new digital and data-driven banking environment.

11 November 2019 449 downloads

Report

The State Of AI In Financial Services

A small number of multinational top-tier financial institutions are already among the most world's most sophisticated users of enterprise-level artificial intelligence (AI). But while much has been written about the potential for AI to address business problems across the industry, adoption rates and the level of maturity vary widely. The journey usually begins with data scientists pulling together data sets for experimentation and finding insights and ideas to suggest to innovation teams and business units. From there it often progresses to obvious use cases such as improving money laundering surveillance and financial crime detection. Eventually, organisations are widening the context of their data through internal consolidation and enrichment with third-party data, and running models and decision engines across multiple functions within the organisation. Depending on the use case, these can deliver streamlined digital channel processing with automated decisions – or rapid presentation of context and insight for human-in-the-loop decisions. It is the evolution leading to large scale investment, adoption of AI approaches and return on this investment, that this survey sought to illuminate. How many institutions are at each stage of this evolution? What use cases are they focusing on and what challenges are they encountering along the way?

30 October 2019 945 downloads

Report

The Future of Payments: How to Accelerate Digital Transformation in Payments

The last decade has seen an acceleration in the rate at which banks are being encouraged, or required, to innovate and transform their business. With PSD2 and GDPR now in action, questions are being raised about whether this was a success for the payments market and whether legacy structures need to be shaken up as the status of real-time payments and open banking initiatives in Europe become complicated. Banks are also having to contend with the likes of Google, Apple, Facebook, Amazon and Alibaba as they figure out the best way to deliver API-based, contextual financial services in an open ecosystem, especially when the suite of tools that artificial intelligence offers is being leveraged by Big Techs. Finextra’s The Future of Payments 2019 report will explore how financial institutions are transforming the cash management process to provide newer and more innovative solutions for liquidity, payments and electronic banking. The report looks at how banks are revising core operations following the implementation of regulations such as PSD2 across the European Union and discusses open banking initiatives that have blossomed in other parts of the world after learning from the mistakes made in the UK.

01 October 2019 759 downloads

Report

Data-First Transformation in HR: The Value Proposition of Implementing Compensation Technology

Wholesale digital transformation is the new norm in financial services. It will stay this way too, as organisations need to become agile, continually morphing and transforming in line with more sophisticated data management as well as frequent regulatory updates and iterations. In terms of operations and, more specifically, HR, banks can analyse data on employees to optimise business functions, better attract and engage top performers, and improve productivity in the same way that they leverage customer behavioural analytics to improve products and services. Holistic capturing of data can inform and fuel all manner of cultural transformation. With a greater view and better management of staff compensation across an organisation, a light can be shone on any pay inequalities, for example. Thus, diversity issues can be addressed and eradicated. Manual processes, heavily reliant on spreadsheets, are overdue for transformation, and greater understanding of rewards strategy and history alongside a better understanding of employees can strengthen and promote a stronger business ethos and brand and help attract the best talent. In this way, data-fuelled technology to improve compensation management can yield wider benefits to the business, and with a simplified and agile data management system, schemes of equal and greater complexity can be supported. Download the full paper to find out more.

30 September 2019 165 downloads

Report

Payments Transformation: Building a Vision Which is Instant, Seamless and Secure

2019 marks the 5th edition of the annual Fiserv and Finextra global payments survey. Since the 1st edition in 2015 the change, and the increasing pace and scale of change has been the consistent characteristic of the payments landscape, whether at a central infrastructure level or that of individual providers, all driven by rapidly changing customer expectations. As in previous years, the survey was undertaken online during the summer of 2019, garnering responses from senior executives at banks and financial institutions globally. The requirement to move money instantly, seamlessly and securely is now clearly understood. The ability of the payments industry, however, to deliver on that expectation is still very much a ‘work in progress’. Increasing the speed of moving money is a marathon, not a sprint and will take some years for the technical challenges and commercial benefits to be comprehensively worked out. This year we found a strong alignment of views across strategy and opportunities. The findings highlight again the extent to which the payments landscape remains dynamic and will continue to do so for the foreseeable future. Download the paper to read the results.

23 September 2019 1217 downloads

Report

AI, Open Banking and Client Lifecycle Management – Differentiation Opportunities Abound

In mid-2019 Finextra and Pega conducted an online survey of senior business and technology managers from 27 countries, representing 54 financial institutions and fintechs, on the impact of AI and open banking on their strategies for onboarding, KYC and client lifecycle management. This survey sought to gauge the current perception in the market of AI’s current use and suitability, and potential benefits and challenges, for implementation in the areas of onboarding, KYC and Client Lifecycle Management. It also asked questions to evaluate where open banking provides opportunities for growing market share and revenue growth, and to what extent it complicates onboarding and regulatory compliance processes. Download the paper now to read the results.

20 September 2019 886 downloads

Report

The Future of AI: Applications for banking business transformation

While artificial intelligence has established itself as a disruptive technology for decades, AI is at the peak of the hype cycle now and banks have started to apply this technology to transform traditional models of businesses. However, being a multi-faceted technology, financial institutions must decipher whether it is machine learning, robotics, deep learning, business intelligence, natural language processing or algorithms that are the most beneficial. While some banks launch chatbot applications and virtual assistants, others do not have the talent within the business to deploy innovative products that are personalised for their customers, and an even smaller number do not understand the value of AI. Finextra’s The Future of Artificial Intelligence 2019 report will explore how the financial services industry can leverage tried and tested experiments of AI in other industries to transform how transaction services can be reshaped. The report looks at how machine learning, deep learning and robotics could benefit banks and could improve customer experience and security, aligning decision-making factors with ethics to improve how a financial institution operates.

16 August 2019 857 downloads

Report

Top Global Banking Technology Trends

Against the backdrop of an increasingly digital world, banks are facing growing competition, in many cases from non-traditional players, which puts greater emphasis on the need to innovate whilst simultaneously transforming their businesses- all the while keeping an eye on the bottom line. The effect of these imperatives on banks’ IT systems, infrastructure as well as go-to-market strategy is further complicated by regulatory compliance – particularly around opening-up market access to enable greater competition, eg. KYC, AML, PSD2. This research paper produced by Finextra, in association with Virtusa, examines and analyses how banks are responding to these significant changes in their market by identifying the top 10 banking technology trends for 2019.

14 August 2019 1396 downloads

Report

The Future of Banking is Open

The open banking dialogue has at last moved on from compliance concerns and turned to what opportunities, as well as challenges, exist for banks. 2019 could be the year that open banking takes hold but only if banks are able to deliver value-added, premium services via application programming interfaces (APIs). These tools are still in their early stages of development but through robust testing, more standardisation, intelligent use of data and partnerships, banks can develop services that both enhance the user experience and generate new sources of revenue. Banks should be looking at what valuable services they can actually charge for, what services go beyond data capture and money movement and involve new lines of revenue – from online FX wallets to digital banking. They should also look at areas such as corporate banking that are ripe for disruption given that the current dashboard services on offer are typically basic and static. Download this new whitepaper from Finextra, in association with Token, as we explore the shift towards ‘premium’ API-driven banking culture, what drivers and challenges are shaping the developments, and what the new wave of open banking products and services might look like.

29 July 2019 1192 downloads

Report

Interconnection and the speed of change in the Nordics

There has been a consistent focus on digital transformation within the Nordic traditional financial services industry. This paper, produced by Finextra in association with Equinix, explores how interconnection and collaboration can help banks successfully navigate digital transformation and secure competitive advantage within the Nordics, and indeed any banking ecosystem. In 2018, through an online survey of over 100 expert financial services professionals, and a series of one-to-one interviews with senior bankers, our previous paper laid out key issues and opportunities faced by banks over the next five years. This paper builds on this survey to examine why the Nordic region is unique and how the area has embraced digital innovation, while also maintaining traditional banking ideals. It will also point to where challenger banks stand in the Nordics, how this relationship will play out and how the data conundrum is being dealt with amid the wave of digital payments.

23 July 2019 410 downloads

Report

Utilising AI to Prevent Financial Crime

The convergence of open banking, data protection regulation, digitalisation of services and advancement of technology and artificial intelligence has caused profound and prolific changes to the financial services industry. It has also opened new doors and fresh opportunity for fraudsters, who are equally taking advantage of new technologies and the reams of data that now exists in the banking ecosphere. Keeping transactions secure as financial organisations move into a world of open banking is a race that gets faster by the launch of a new banking API. Risk management, cyber security and fraud strategists need to collaborate to stay ahead of the competition, while addressing the needs of the new digital customer, which includes the hefty task of protecting their data. Questions about liability in multi-party transactions and ever-increasing systems and protocols abound, as businesses transform to an end-state not yet known. New attack vectors in transactions and account opening come to the fore on a daily basis. How can banks utilise Machine Learning (ML) and AI in the fight against fraud in this real-time and fully digital marketplace With the emergence of open source technology, is there scope for data sharing to arm organisations with real-time information and anomaly detection? Could business functions communicate better internally to support the fight against fraud? This research paper by Finextra, in association with Feedzai, gathers the views of several senior data science and fraud experts from across the financial services industry on how to tackle fraud with AI as open banking and digitalisation continue to evolve.

09 May 2019 456 downloads

Report

UK Open Banking APIs Performance Analysis: 2018

The report examines the performance of the UK's CMA9 group of Open Banking APIs in 2018. The purpose of the report is to establish a methodology and benchmarks for measuring API performance. With a wave of API-based services and business models transforming financial services in many markets, the dependency on service quality of APIs will become critical to banks, fintechs and, most importantly, to both consumers and business customers. The 28 page report details the API performance of 11 major UK banks across a variety of technical performance measures through 2018. The report includes APImetrics proprietary Cloud API Service Consistency (CASC) scores for all 11 banks. CASC scores are derived using APImetrics active monitoring platform, which gathers data from up to 75 locations worldwide on four clouds. Additionally, the report details the comparative performance of AWS, Google Cloud, Microsoft Azure and IBM Cloud. The report is researched and written by the consulting team at APImetrics and published in partnership with Finextra Research.

03 May 2019 904 downloads