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

Report

The Future of Fintech in the UK 2023

A Special Edition for UK Fintech Week 2023 and IFGS 2023 Fintech investment across Europe, the Middle East and Africa fell from $79 billion across 2,379 deals in 2021 to $44.9 billion across 1,977 deals in 2022, according to KPMG’s biannual analysis of global fintech investment, the ‘Pulse of Fintech’ report. Further, total UK fintech investment hit $17.4 billion in 2022, down from $39.1 in 2021. The first half of last year was much stronger than the second, accounting for $32.8 billion in investment, including six deals worth over $1 billion, which includes the $1.8 billion acquisition of interactive investor by abrdn. The latter half of 2022 also saw $12 billion in investment, with the largest deals all valued under $1 billion, including the $839 million buyout of Nucleus Financial by HPS Investment Partners. But what does the future hold for fintech investment in the UK in 2023? This Finextra report, a special edition for Innovate Finance Global Summit and UK Fintech Week 2023, collates interviews with a number of leading fintech firms operating in the UK and explores topics that will be covered at the event in London. Key insights from the likes of Archie, Creditspring, Harrington Starr, Konsentus, KPMG, Moneyfarm, Nova Credit, OakNorth, Open Banking Excellence, Ozone API, Pave, Pollinate, PPRO, Quantexa, Sonovate, Thought Machine, Truelayer, and Zopa, cover how fintech firms across the UK are preparing for the future.

13 April 2023 685 downloads

Report

Customer Experience - Is Hyperpersonalisation the next frontier?

An Inflection Point as Banks Invest to Improve Customer Experience A Finextra research survey, which was conducted in late 2022/early 2023, aimed to quantify priorities and ambitions in financial services with regard to improving the digital experience of services for the customer, and to what extent services have or will become personalised, or even hyperpersonalised. Financial institutions are prioritising investment in customer experience capabilities in what is seen as a key “inflection point” behind new IT-led growth initiatives, results from this primary research survey show. But feedback also reveals the challenges this objective brings, including legacy IT infrastructure and restrictions imposed by regulatory obligations around data storage and processing. The findings show a genuine and growing appetite by banks and other financial service providers to invest more in making customers’ online engagements easier and more fulfilling. Download your copy of this Finextra Survey Report, produced in association with SoftServe, to learn more.

06 April 2023 443 downloads

Impact Study

How banks can expand the omnichannel for virtual signing experiences

The global pandemic presented a challenge to the way many products and services were offered by banks, and now that we are on the other side of Covid-19, the impact is clear. Covid has permanently altered the expectations and possibilities of how banks conduct their business. According to finder.com, in 2023 24% of people in Britain have a digital-only bank account, compared with only 9% in 2019. This trend looks set to continue with 5.3 million Britons intending to open a digital only bank account in 2023. To achieve success given these dynamics, financial institutions must balance the convenience of the virtual world with the personal touch of th real world. Customers expect their financial service provider to offer the same digital experience they are receiving in other areas of their life. For instance, the proliferation of existing tools that improve digital experiences such as Zoom, Microsoft Teams, or AI-based chatbots, are now proven and effective enablers of digital innovation. However, automation is no longer enough. Today, security and a human connection is a must-have, particularly because remote working is now normalised, but the requirement for collaboration persists. In a world where we are making more financial decisions on digital platforms, there must be a process in place where meetings can be tracked and signatures can be ensured virtually. This Finextra impact study, produced in association with OneSpan, explores how financial services providers can balance security, compliance, and remote interactivity with the need for a more human centric digital experience.

31 March 2023 189 downloads

Report

Mainframe Modernisation, the Digital Endgame

Mainframes have been in existence since the 1950s and a decade later, were partly responsible for putting man on the moon. It was one small step for computing, and one giant leap for organisations. Since then, mainframes have been the central nervous system that has underpinned many large organisations and as a result, have been involved in processing large volumes of transactions. However, the financial services industry is currently at a tipping point where mainframes need to be modernised and more cost effective to meet the needs of today’s customers. This is where the cloud comes in. Mainframe modernisation has become an essential, but ever evolving topic of discussion within all financial institutions embarking on a cloud journey or executing on the cloud. At the start of the century, banks were questioning the importance of the cloud and how to establish an adoption strategy around the technology. When Covid-19 hit, financial institutions needed to look beyond long-term success to enable progress at a faster, better, and cheaper rate. At a recent Finextra webinar, ‘Mainframe modernisation: Overcoming hurdles to achieve agility’, in association with Accenture and Amazon Web Services (AWS), the panel explored how ultimately, mainframe modernisation is now an element of risk management. This event report outlines the findings from that session.

13 March 2023 320 downloads

Report

Sustainable Finance Live - Enabling positive change through innovation and collaboration

A Visual Record from the Sustainable Finance Live Conference and Hackathon 2022 Sustainable Finance Live returned for its fifth edition - and second in-person event - at Events@no6 in London on 29th November 2022. Richard Peers, sustainable finance visionary, contributing editor at Finextra, and founder of Responsible Risk took to the stage to lead a programme of content, workshops, and experiments designed to create actionable ESG strategies and build the ecosystem of partnerships, which will turn strategy into reality. The event saw over 100 attendees lean in, lean back, and learn by doing during the interactive parts of the day. Leaders in the sustainable finance industry discussed the problem statements and solutions that are defining the sector today. The main themes of the conference were data, risk, and financial instruments. Peers explored risk management through the lens of a self-driving car which can use its technology and sensors to move into either the fast or slow lane to avoid an upcoming crash that we cannot yet see. He said: "The finance industry is still looking in the rear-view mirror, basing our risk decisions based on smaller historical analysis, which still of course has huge purpose. "What we want to talk about is how can we actually bring all of the new dynamics in play, so that we can see the slow-motion car crash of climate change, biodiversity loss. "We can think about what that means to our portfolios, and we can actually make the appropriate decisions." Download a Visual Record of the event below to find out more.

31 January 2023 397 downloads

Report

UK Open Banking API Performance 2021-2022

The UK continues to be at the forefront of the global Open Banking revolution thanks to the proactive attitude of the regulators. These regulators helped create an Open Banking ecosystem that encourages and facilitates smaller banks and new entries, including fintechs and neobanks, to participate in the Open Banking market. As the most advanced Open Banking market in the world, the UK provides an example of best practices in the implementation of API-based Open Banking. We studied the performance of the large CMA9 UK banks, traditional High Street banks, credit card providers and building societies, and new entrant banks (neobanks). The endpoints were provided by the banks and measured using our patented APImetrics quality scoring system, CASC (Cloud API Service Consistency). Download your copy of this research report by APImetrics, which is generated from real API calls made using the FAPI compliant consent process with the partnership of tomato pay, a leading open banking provider in the UK. All calls were made between July 1, 2021 and June 30, 2022.

26 October 2022 421 downloads

Sentiment Paper

Seeking Approval - Acquirers vs. Transaction Fraud

Transaction fraud monitoring lies at the heart of fraud prevention for acquiring banks, and while the effort in decreasing fraud rates has advanced significantly, so has the sophistication of fraudsters themselves. The emergence of AI within fraud solution models has come to the fore in recent years and along with it, newly realised appreciation of the value of transaction data, current and historic. Banks need to get to grips with processing and utilising these data to full advantage, to inform a robust and futureproof strategy which can both increase approvals and reduce fraud. For transaction monitoring solutions to drive value, serving both merchants and acquirers alike, intelligence on any given transaction needs to be issued in real time before the submission of authorisation. Approval rates, pricing, customer-centricity, and fraud rates are always going to be key differentiators in a very competitive market. Within these parameters, banks need to continually improve their service to remain competitive, while navigating the various tools and techniques that are rapidly emerging. Different business models prioritise different aspects of case management and scoring, using traditional rules-based methods and more data-led AI and ML approaches. This Finextra industry sentiment report was produced in association with Brighertion, a Mastercard company. It is based on several industry interviews, through which we aim to take a pulse on the industry’s general appetite for real-time, AI-driven, data-rich transaction fraud monitoring, and the various models, technologies, and priorities that shape acquirers’ anti-fraud strategies.

25 October 2022 464 downloads

Report

The Future of Digital Banking in North America 2023

A Money20/20 USA Special Edition 2022 in North America saw a continuation of economic recovery from the Covid-19 pandemic, fuelled by the rapid rollout of vaccinations particularly across the US and Canada. Although the US was the fastest of the G7 economies to recover from the crisis, an enduring impact of the Russia-Ukraine conflict resulted in high inflation and the subsequent cost-of-living crisis is set to continue into 2023. These macrotrends are a catalyst for digital transformation within the financial services industry as banks attempt to grapple with new payments trends, the evolution of digital identity and innovative uses of data to enhance customer experience across retail, wholesale and commercial relationships. In 2022, digital banking for the consumer is far more advanced than the products and services that are available for merchants or large corporations. In 2023, open banking must be utilised to remedy this issue. For the retail customer, although digital methods of managing money are now part and parcel of day-to-day life, the pandemic encouraged, or in some cases, forced people who may have been uncomfortable with using technology to bank on their mobile phones or desktop computers. This unfamiliarity with technology has led to consumers being in environments in which they are vulnerable and at increased risk of fraud and other types of financial crime. In 2023, banks will need to ascertain what they need to adapt and strengthen in fraud prevention while also managing new regulatory and compliance requirements. Further, the areas of onboarding that need to be automated must also be considered as part of a holistic digital strategy, striking the balance between innovation and digital noise. For instance, Web3, the metaverse, digital assets and tokenisation are no longer the monopoly of global tech giants, but are increasingly being shaped by financial players who are having their relevance threatened. This Finextra report, which features expert views from ebankIT, EPAM Systems, Infosys Finacle, and Trustly, will explore topics that impact the digital banking sector and those that will be covered at Money20/20 USA 2022 in Las Vegas. Additionally, key insights from Wells Fargo, Plaid, Green Dot, Silicon Valley Bank, FXC Intelligence, Synapse, Navy Federal Credit Union, Branch, Citi, and the New York State Department of Financial Services will cover how organisations across North America are preparing for imminent change across the digital banking landscape.

21 October 2022 1152 downloads

Report

Banking as a Service: Predictions for 2023

Cloud strategies are changing After the financial crisis of 2008, traditional lenders experienced a drop in revenue and new players successfully gained traction after offering products that had been in high demand and long expected from existing banks. This trend advanced after regulators across the world endorsed open banking initiatives, data requirements were standardised and in turn, financial players gradually opened up to technology. With the transparency that open banking provides, banks were encouraged to offer digital services, fair pricing, and increased security. Further, they are forced to utilise application programming interfaces (APIs) for seamless information exchange between partners. This trend has since evolved: with open finance, APIs can facilitate the interchange of data, products and services in an attempt to improve customer experience, offer greater choice, and control over their finances. In 2020, the financial services industry - particularly banks - implemented emerging technologies to accelerate innovation across the infrastructure of core functions in real-time, and underlying trends that were previously being considered were utilised in weeks, rather than months or years. The coronavirus has led to relationships with consumers being reimagined and relationships with ecosystem partners being redefined; this also resulted in products and services being reconsidered. Technology providers are no longer just technology vendors: startups, scaleups and even unicorns are now viable collaborators for financial institutions. In this post-lockdown era, banks are tapping into this partnership model to enhance their digital transformation to keep pace with customer requirements and avoid being disrupted by newer, more technology-savvy, entrants. When banks work with technology companies, APIs can be built with a number of microservices that can communicate and connect with these third parties, building upon open finance solutions on cloud-based platforms. This allows financial institutions to scale on demand, pay for only what is consumed, and expand serverless architectures. Financial institutions are no longer considering the cloud – the cloud is necessary for how finance works today. An emerging yet burgeoning trend that will continue to evolve and grow in 2023 – banking as a service (BaaS) - offers a new route to market for banks and empowers them to attract new, niche customers by leveraging the cloud. BaaS also allows non-financial companies to push out financial products where and when they are needed, direct to their customers with minimal investment and with the benefit of cloud-based, pay-as-you-go pricing. This Finextra impact study, produced in association with i-exceed, explores how financial institutions and technology providers can collaborate to deploy mobile and web-based banking solutions at a faster rate.

20 October 2022 999 downloads

Report

SaaS: The case for building a new banking business model

Why is SaaS pivotal to tackling regulatory, competition, and technology challenges? Banks are no longer only interested in building their infrastructure in order to serve their customers the best they can. Rather, they strive to position themselves as the orchestrators of API platforms. Software as a Service (SaaS) deployment models are the ideal tool to reduce the struggles faced by banks as their role evolves. SaaS models are highly effective, as they target some of the key challenges banks face in their efforts to digitally evolve while remaining competitive. An increasingly demanding customer base, competition from agile digital players, regulatory burdens and legacy technology are four of these significant hurdles that can be mitigated using SaaS. Not only does SaaS assist in managing these challenges, it can also equip financial institutions with the toolkit required to thrive in the future. This Finextra impact study, produced in association with Temenos, explores how banks can best leverage technologies by third-party providers in order to mitigate industry pressures threatening their business model, adapt to shifts in customers' interaction behaviour, and improve their ability to remain competitive in an increasingly digital ecosystem.

03 October 2022 518 downloads

Report

The Future of ESGTech 2023

A Sibos Special Edition While new risks emerge, so do new opportunities for financial services providers to lead technological innovation and drive positive global change. The key question at this year’s Sibos event and into 2023 will be around how success can be measured, and whether organisations that pave the way for the future of banking will be able to adapt to these new priorities and shifting geographical landscapes. Alongside scaling forward-thinking innovations and managing risk in an uncertain world, in 2023, banks must leverage innovations such as AI, machine learning, big data and privacy enhancing technologies to deliver operational efficiencies and an enhanced service offering. Further, by utilising new initiatives such as Banking as a Service (BaaS), financial players can increase their banking footprint through networks of third-party applications, while at the same time, modernising their legacy platforms and products. With this level of innovation to hand – in a world where financial services providers are being forced to adjust to geopolitical, regulatory, and cybersecurity risks – business models must also evolve to ensure success in uncertain times, whether it be the Covid-19 pandemic, climate change or any other global issue that the United Nations’ Sustainable Development Goals aim to achieve. Driving sustainability and ethics will be pivotal in 2023. This report, featuring expert views from SWIFT, GLEIF, and NayaOne, will explore issues such as climate disclosures, ESG standardisation, greenwashing, and financial inclusion. In addition to this, key insights from the Abraham Kuyper Center, Barclays, BBVA, HSBC, and MUFG, will explore how organisations lead positive change across the globe.

12 September 2022 800 downloads

Report

Mainframe to Cloud: How to shift applications

The shift to the cloud The financial services industry is increasingly turning to the cloud to resolve challenges involving the movement of money. However, some banks, payments providers, capital markets firms and insurance companies are still questioning why an accelerated shift to the cloud is required. Further, what are the conditions, circumstances and considerations that should be taken into account when looking to migrate applications? It’s not just about technology. It’s about culture and the talent that is needed to transform from a legacy-based infrastructure and deal with a more agile method of operating and collaborating with partners in a cloud environment. This generational repositioning should be managed in an efficient manner to facilitate a successful, safe passage of moving from one domain to another. The mainframe, or the central repository, in an organisation’s data centre is usually linked to its users through workstations or terminals. Although the presence of a mainframe often implies a centralised form of computing, they are in dire need of modernisation. Those with awareness of how to transform the mainframe, how to consume the cloud, and who are able to to establish a strategic blueprint for their digital transition will be better positioned to retain their customer base. Each financial institution will have a different journey to the cloud: some will opt for a hybrid model, others will transform with the cloud or to the cloud. Mainframes present vast opportunities, but the time has come for the self-written applications and the mainframe-based business processes to be modernised. To explore these opportunities, specialists gathered for a Finextra webinar, ‘Mainframe Modernisation: The cloud shift’, that was hosted in association with Deloitte and Amazon Web Services (AWS). The webinar panel looked to discuss how mainframes can provide mission critical functionalities for financial institutions and the very specific challenges that come with modernising mainframes. This event report outlines the findings from that session.

05 September 2022 331 downloads

Report

Onboarding, KYC, and Digital Identity: the Bottom Line

Technology is continuing to evolve at a fast rate. Consumers have evolved and now expect a digital onboarding process. This presents an opportunity for banks because enhanced customer onboarding can boost a bank’s retention rate. It is the first interaction that a customer, instead of a prospect, experiences and if conducted correctly, it can lead to multiple purchases and build customer loyalty. Regardless of how seamless the process is for a customer to be onboarded, it is only revenue that will result in a return in investment. While automation can supplement an excellent customer experience, nation-wide digital identity schemes can also improve the process. Across the world, governments have played an important role in helping set the scene for digital ID solutions, but a government-only solution is unlikely to be successful. Banks, fintech firms and technology providers must collaborate to ensure identity solutions are utilised. However, while customers want an easy onboarding process, organisations must capture, validate, and monitor customer identities — without increasing customer friction. Taking collaboration further, within the organisation, digital transformation, risk management, data security, and compliance teams must put best practices in place to balance digital onboarding with fraud prevention. This Finextra impact study, produced in association with VeriPark, explores how despite the emergence of digital channels, onboarding is still occurring in a fragmented manner.

10 August 2022 805 downloads

Report

Rebundling: The Next Stage of the Fintech Evolution

The next stage of the fintech evolution is rebundling. At the core of the industry, the catalyst for fintech evolution has continued to be disruption and innovation, but not one banking or financial services issue can simply be resolved with only disruption or innovation. After the global financial crisis of 2008, it would have been unusual to have more than one or two banking relationships. However, the emergence of an open playing field, and with the application of the Second Payment Services Directive – more commonly known as PSD2 – across Europe, non-financial businesses were able to leverage open banking and open finance initiatives to offer financial services directly to their customers. This, in turn, widened the competition and resulted in the birth of fintech businesses that each focused on attacking one part of the banking value chain – be it payments, lending, FX, or another type of offering. Slow, complex, and expensive processes were no longer the status quo; and alternative players started to disintermediate the incumbents. These new entrants increasingly became popular because of their intention to improve customer experience and provide better products and services than the banks could – and in many cases, disruptors were both better and cheaper than the banks. Additionally, new fintech channels and platforms have become viable competitors to traditional players, tempting consumers away from the institutions they trust in favour of better user experiences. Now it is not unusual for people to have up to 15 financial apps downloaded on to their mobile phones. This Finextra impact study, produced in association with Banking Circle Group, explores the evolution of fintechs and Big Techs from unbundling towards rebundling of financial products and services to the benefit of customers, as well as providing examples for the modernisation of banks and financial institutions.

22 July 2022 787 downloads

Report

The Future of Digital Banking in the UK 2022

The digital transformation of financial services remains a defining journey being undertaken by banks and fintechs across the globe. Increased digitisation of banking services after the Covid-19 pandemic, demonstrates how financial institutions are becoming more agile and better equipped to serve their end-customer. The future of banking is an industry reliant on cloud-based technology and partnerships with fintechs to drive their businesses forward. The digitisation of financial services through mobile apps, audio chatbots, and automation makes banking more personalised and convenient to users. However, accompanying this digitisation comes challenges such as cybersecurity and fraud, arising from this shift toward a digital ecosystem. Talent has never been in higher demand, and retaining strong employees with the right training is pivotal to succeeding digitally. By partnering with fintechs, banks are overcoming these challenges and navigating the new environment with the future front-of-mind. Featuring expert views from 10x Banking, Infosys Finacle, Mambu, and Salt Edge, and insights from Lloyds, first direct, OakNorth, and Santander, this Finextra report will explore how industry leaders perceive key events and trends defining the future of digital banking in the UK, during 2022 and beyond.

07 July 2022 1381 downloads