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

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Could a Unified Approach to Digital Identity Disrupt the Banking Industry?

Digital identity - the body of information or unique identifiers and user patterns that detect individuals online and on their devices – could become the most valuable commodity for the citizens of the future, said Google Chairman Eric Schmidt back in 2013. It is also a source of both huge opportunities and significant challenges for banks and other financial institutions. Banks must ensure they are able to correctly verify identities, have control over how the information is used and ensure that they provide the right service to the right person in the right context. But should banks be able to meet these challenges, the benefits are clear – greater volumes of customer participation and transactions, the ability to generate and access huge volumes of data, and the chance to create a more seamless and intuitive customer experience. Could a unified approach to digital identity disrupt the banking industry? And could it also be the key to enhancing the customer experience? This research paper, produced by Finextra, in association with Ping Identity, seeks to address these questions and more, by speaking to the identity managers at leading institutions for their views and bringing to the fore a major aspect of the change afoot within the global banking industry.

02 May 2019 606 downloads

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The Missing Link in Re-Mapping Ecosystems

What are the issues for fintechs or challenger banks straddling the constraints and opportunities of PSD2 and the opening of the retail banking market? Fintechs, who have been given an open goal in the wake of PSD2 have their work cut out to align themselves to large financial organisations in order to make the most of the opportunities afforded. When the end state is not known, and there is a dearth of clear examples of ecosystems in which banks, corporates and smaller third parties can come together, it poses a very difficult challenge to get it right. At an exclusive roundtable hosted by Finextra in association with EPAM, prototyping language was one key mistake highlighted by a delegate on the part of fintechs looking to connect and partner with large banks. The example given, which was not the first of its kind, was that the prototyping language is a potentially overlooked point of failure. Neither robust, sustainable nor repeatable, it signalled an early death knell for any future potential. Download the full paper to find out more.

10 April 2019 419 downloads

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The Future of Personal Identity

2018 saw the implementation of the General Data Protection Regulation (GDPR) across the European Union and European Economic Area and subsequently in the UK, a new version of the Data Protection Act (DPA) was enacted. Despite this new wave of regulation, lack of security in new technology may call for yet more standards in the future. Technology providers, financial institutions and governments are all being closely scrutinised following a year of substantial data breaches and compromises of trust. Most notably the Cambridge Analytica and Facebook scandal, has resulted in the marketplaces in the US and UK looking to learn about best practices and innovation from other countries. This report on The Future of Personal Identity analyses the advantages and disadvantages of private, public and federated identification systems and whether industry leaders believe that banks are in the best position to provide trusted authentication services.

18 March 2019 534 downloads

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Key Drivers, Emerging Trends and Developments in Corporate Banking

In seeking to serve the ever-evolving and increasingly global needs of their corporate customers banks face a diverse and complex set of challenges. At the heart of these is the issue of how banks can remain relevant to their clients in a world in which their regulators are opening banking to new competitors who are both agile and powered by the latest technologies. The response of banks to these challenges is the adoption of a new and transformative approach, focused on supporting their corporate clients on an end-to-end basis on all their customer journeys. Through the development of new financial ecosystems supported by innovative new capabilities (such as Virtual Accounts, Artificial Intelligence and Blockchain) banks seek to give their clients speedy access to the information, insight, cash and credit they need to maximise the efficiency of their business operations on a global basis. In developing their strategic responses banks are increasingly moving away from their legacy approach to IT development based on a combination of inhouse build and / or purchase from traditional vendors, toward partnering with often relatively small specialist fintech providers. This research paper produced by Finextra, in association with Oracle, analyses these key market drivers and emerging trends and developments, bringing to the fore major aspects of the transformation of corporate banking.

11 March 2019 664 downloads

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Cyber Security in Financial Services: Orchestrating the Best Defence in an Evolving Threat Landscape

Data, IT and business security have always been paramount for financial organisations. But in an increasingly digitised world, more data is being produced faster than ever. Financial organisations are encouraged to share customer data while at the same time being expected to safeguard it with progressively stronger measures. Data they are responsible for often resides outside their organisation and can be accessed by a multitude of systems and devices. In 2018 the World Economic Forum (WEF) surveyed more than 12,000 executives around the world about what they considered to be the biggest risks to doing business, ranging across political, societal and technological concerns. Cyber-attacks were considered the number one risk by executives in Europe and advanced economies. Financial Services has been, and continues to be, a targeted sector, and cybercrime is becoming sophisticated on an industrial scale. A more strategic and wholesale approach needs to be adopted industry-wide to fend off the threat, particularly as detection and response times are increasing. Download this new paper by Finexra and ServiceNow to find out more.

27 February 2019 444 downloads

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Roundtable insights

Finextra Research, Finastra and Microsoft held exclusive breakfast roundtables in Munich, Paris and Stockholm which explored how the payment sector is developing payment services to the corporate and retail markets. The discussions, held under Chatham House Rule, explored how factors such as instant payments, open banking, fintechs and payments infrastructure are impacting banks and how banks can compete and remain relevant. Download the paper to learn: How factors such as instant payments can disrupt fintech, and whether the German banking sector can adapt to the European pace of development. How open banking, immediate payments and fintech disruption are impacting banks in the Nordics, where the rapid pace of development is leading the industry. Future requirements for customers, how cloud technologies can lead to new business models, and how banks can compete

06 February 2019 627 downloads

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Putting Data to Work in the Digital Economy

At this year's Sibos in Sydney, technology and data were again the two key recurring themes identified as critical to enabling and propelling the future of financial services. The difference this year was in two areas. Firstly, the intense focus on integrating technology into the business to save costs and generate revenue especially in the area of advanced analytics and artificial intelligence (AI). The second key difference was the concern around global geo-politics – globalism versus nationalism – and its impact on data movement and data access. These challenges and the takeaways outlined in this paper highlight the need and the sense of urgency to develop a new business architecture for financial services that is flexible, adaptable, open and future proof. The business architecture needs to span all aspects of the organisation across infrastructure, data, process, people, and culture, and it will set the stage for data-driven digital transformation.

20 December 2018 544 downloads

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Fraud Detection: Embracing New Technologies for Frictionless Payments

Payments fraud is a significant challenge for banks and is set to become more problematic as payment channels and payment services providers (PSPs) proliferate, regulation reshapes the way payments are transacted and the world migrates away from cash towards electronic, often real-time, payments. In Europe, the revised Payment Services Directive (PSD2) allows third party developers to directly interact with a partner banks’ customers, raising questions about the use of customer data by the third parties and extension of the security boundaries. This trend towards open banking is being adopted elsewhere in the world, including in Australia, the US and Hong Kong. In the increasingly networked ecosystem of payments, identifying fraudsters will be a challenge, but under PSD2, financial institutions are required to monitor all transactions for fraud-related activities. The traditional, silo-based approach to fraud detection is fast becoming obsolete. For too long, banks have lagged in their ability to align fraud detection with the speed of transactions as payments move away from cash towards CNP (Card Not Present) transactions. The financial industry is shifting towards real-time data analysis, deploying artificial intelligence, machine learning and Cloud capability to transition towards a digital ecosystem. Banks must ensure they stay ahead of the increasing technological threat from criminals and fraudsters.

30 November 2018 841 downloads

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The Critical Change You Need to Make to your Customer Engagement Strategy

Retail banking is currently undergoing a period of unprecedented disruption from a combination of new market entrants (challenger / digital banks and fintechs), demanding tech-savvy customers, regulatory change and the need to focus on cost reduction and efficiency. Additionally, there is a growing customer perception that banks are no longer relevant to their daily lives. This paper, produced by Finextra Research in association with Diebold Nixdorf, identifies the key challenges of a new future-proof strategy for retail banking and provide practical examples of what banks around the world are doing about them. The paper is supported with insights and information obtained at DN’s International Management Seminar 2018 (IMS 2018), held in Lisbon on 8th – 10th October and titled ‘Revitalise Retail Banking Agility - Embrace the Larger Ecosystem’ and contains 13 videos and multiple real cases from leading banks including BBVA and BPI. Drawing on presentations given at Diebold Nixdorf International Management Seminar by a diverse group of top bank executives, the paper explores the following themes: The key market trends forcing banks to accelerate their pace of change The need to create seamless consumer journeys that transcend a single physical or digital channel The agile innovation approaches and new philosophies on operational excellence and service delivery that are driving successful transformation programmes in real-world settings How the ultimate prize for a bank is to use regulatory changes such as Open Banking and PSD2 to position itself at the centre of a Connected Commerce ecosystem comprising a variety of partners – assuring the bank’s continued relevance to the key journeys of their customers.

27 November 2018 755 downloads

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Clearing and Settlement: The new battleground for payments innovation

There is significant innovation and competition afoot in the world of payments initiation, driven by consumers and corporates on the demand side, and traditional banks, fintechs and challengers on the supply side. This is mirrored by what can reasonably be called a revolution in the world of clearing and settlement. Real-time / instant payments, blockchain and distributed ledger, new solutions to the old problems of cross-border correspondent banking, and many other initiatives all have the potential to transform how payments are processed, cleared and settled. Financial institutions therefore need to find ways to provide compelling business services based on new methods of payment initiation and novel customer experiences, while keeping pace with the multiplicity of back-end clearing and settlement options – all while managing costs, staying ahead of compliance, and growing market share.

12 November 2018 951 downloads

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The Banks as Universal Digital Trusted ID Providers

This whitepaper by Finextra and HID Global explores the new trends in digital identity and highlights how financial institutions are well placed to play a central role in these developments as well as some of the more advanced responses in the financial sector from both a regulatory and business case perspective. Being able to prove you are who you say you are is the basic underpinning of many economic activities, and traditionally this proof has come in the form of personal interactions and physical documentations. But over the past 20 years, the concept of digital identity has emerged, with varying definitions, and several long-term trends that have been building over the past decade are combining to transform digital identity and the way consumers and businesses interact and transact in the economy. Digital identification and authentication will be radically different in the coming years than the simple username and password combination that have persisted since the dawn of the digital age. And financial institutions, with their long experience of identity assurance and trusted role within the economy, are well placed to play a central role in these developments. Download this new whitepaper produced by Finextra, in association with HID Global, exploring these trends and highlighting some of the more advanced responses in the financial sector from both a regulatory and business case perspective.

06 November 2018 847 downloads

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Payments Transformation: Jostling for Position in the New Digital Landscape

The world is moving ever faster. The willingness of consumers and businesses to tolerate any delay or inconvenience is rapidly approaching zero. Fintechs are entering the market at record pace with a focus on taking profits from any inefficient market. The banking industry is starting to move. From the rapid rise of instant payments to SWIFT gpi, banks are forming a competitive response to these market forces gaining market and mind-share. Download our fourth annual research paper by Finextra in association with Fiserv on the state of the payments market and the competitive challenges and pressures. It focuses on the challenges banks face in building intelligent experiences for their corporate and retail clients to meet their increasing expectation of speed, seamlessness and security. The survey sets out the various aspects of banks transitioning to meet the opportunities and challenges of the ‘faster / instant’ world; the market context (new competitors, new regulations, operation and technologies) with which the banks are contending, the key issues around instant payments and building the business case to support the investment required. This information is supplemented by a look at what’s happening with blockchain and distributed ledger technology. The research was undertaken in September 2018 and is based on a survey of over 100 financial services professionals from around the world.

24 October 2018 1521 downloads

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Digital Revolution in Treasury

Corporate treasurers are becoming more strategic within their organisations, with a focus on digital channels and advanced offerings from their partners that help them add greater value to their organisations’ business success. For corporate treasuries there remains a gap between the digital and real-time nature of financial services that retail customers expect, and the operational reality of corporate banking. Fragmentation, manual and slow movement of funds, batch processes and difficulty in scaling operations remain key problems. However, as instant payments infrastructures become more prominent in an increasing number of countries and payment limits increase, there is a greater potential for change. Combined with the regulatory standardisation of open banking APIs, and the possibilities offered by Virtual Account Management (VAM), the potential for real-time treasury is becoming increasingly attainable. Banks should not become complacent in their role as a trusted partner and provider to corporate treasuries. Indeed, treasurers no longer see banks as their sole trusted advisor. As their needs have evolved, treasurers have become more open to working with service providers outside the banking community. This is driven by treasurers’ increasing interest in automated processes and self-service execution. Rising technological capabilities delivered by fintechs, Enterprise Resource Planning (ERP) vendors and Treasury Management Systems (TMS) are unsettling the status quo. Download this new paper by Finextra in association with Tieto as we explore what options are available to corporate treasuries and what banks need to do in order to address the rapidly evolving requirement of treasuries.

24 October 2018 736 downloads

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AI - The Road to Transformation

The challenge for global financial institutions is how to navigate the Artificial Intelligence (AI) revolution in a successful manner. It requires a full evaluation of operational models, approach to the customer, ability to combine technological acumen with real business needs, and much more besides. At Finextra’s annual NextGen Banking London conference, speakers and panellists discussed how robotics can be deployed to automate processes and increase operational efficiency, and how advanced analytics can enable a better understanding of the customer allowing banks to improve their offering, remain competitive and also reduce fraud. Ultimately, AI is a tool with which to augment the workforce, and a cultural shift is also required in order to fully leverage the benefits to be gleaned from AI. Download this new paper produced by Finextra to find out more.

22 October 2018 132 downloads

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Payment System Assurance – Reducing Risk through Effective Testing

Banks traditionally offer three services: accepting deposits, making loans and moving money. Once an area in which there was little competition and regulatory focus, today payments is a product led business that has changed beyond all recognition. Now banks and the infrastructure providers are at the centre of an environment which moves vast numbers of transactions and monetary value both domestically and internationally and often in real time. Against this backdrop there is increased regulatory legislation and compliance. All payments must be vetted to ensure both their authenticity and funding, and against various watch-lists – anti-money laundering, anti-terrorist financing etc. Further, the banks’ clients now expect the ability to initiate payment transactions from a gamut of devices from the ERP (Enterprise Resource Planning) and TMS (Treasury Management System) systems of large corporates to the mobile devices of millennials. The only certain feature of banks’ payments infra structure today is change, and the amount of change is at historically unprecedented levels. With the huge risks – business, financial, regulatory and reputational - to banks of failures in their payments infra structure, the importance of testing in this area has never been greater. Download this paper produced by Finextra and Iliad solutions examining the quality of the payments-related testing approaches and systems used by banks operating in the UK. It also sets out the obstacles currently preventing them from moving from limited automation and obsolete processes, to a completely new approach based on a strategic investment in technology to rationalise, simplify and fully automate their testing.

19 September 2018 472 downloads