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

Report

Sustainable Finance Live - Supply Chain Traceability: Better Data, Lower Risk

A Visual Record from the Sustainable Finance Live workshops 1 - 2 December 2021 Finextra and Responsible Risk have come together for a thoughtprovoking series of experiential events, welcoming banking and technology ecosystems to collaborate on enabling a wave of change. In 2019, leading banks and the United Nations launched the Principles for Responsible Banking, with 130 banks collectively holding $47 trillion in assets, or one third of the global banking sector, signing up. In line with these Principles, banks committed to strategically align their business with the goals of the Paris Agreement on Climate Change and the Sustainable Development Goals, bolstering their contribution to the achievement of both endeavours. However, this huge volume of capital is trickling from behind a dam created by uncertainty from lack of data, taxonomies, schemas, reporting and products, which, somehow, is robust enough to satisfy the risk register of financial institutions. However, as a result, a lack of confidence around viable options for investing in sustainable initiatives permeates. The solution? Supply chain traceability - yielding dynamic, trustworthy, and secure data from complex supply chains - is required for investors to deliver on the promise of Environmental, Social, and Governance (ESG). Download a Visual Record of the event below to find out more.

20 December 2021 79 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

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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

Don’t go extinct - How Wealth Managers can remain relevant

Transformation drivers and actions to prioritise Until recently, the wealth management industry in the UK has been largely homogeneous, with most traditional firms offering similar products and services to similar customers under similar business models. Fintech has been chipping away at these norms for a few years, but even in 2021, traditional wealth managers with rudimentary digital tools still dominate the market. However, the pace of change has accelerated in the last year. Newcomers are arriving in droves with engaging customer experiences, new technology and convergent services that address the historical limitations of the wealth industry, while opening new doors to new opportunities. Now Covid-19 has put the industry into the spotlight, exposing some enduring weaknesses and highlighting the need for modernisation. In a post-pandemic world, wealth management companies that are willing to innovate will begin to pull sharply away from those that are stuck in the past. Everyone hoping to remain relevant in this space - banks, advisory firms, asset managers, investment managers and technology providers - must be ready to drive transformation or risk extinction. Download your copy of this Finextra impact study, produced in association with Cognizant, to learn more.

29 November 2021 335 downloads

Report

The Future of ESGTech 2022

Employing Data to Deliver on the UN's SDGs The unrealised potential for data to serve fertile, yet dormant, use cases is limitless. Therefore, empowering the reclaiming and repurposing of data is paramount if data is to lead to all people living in peace and prosperity. This endeavour has not progressed due to the entities holding data being unwilling to exchange data over concerns around data protection and security or the prioritisation of the desire to capture direct returns on investment. Others may also be reluctant to share data in hope they gain market power or competitive advantage. In financial services, this has not been the case. With the second Payments Services Directive or PSD2, banks are required to open access to data and share with other organisations. This has increased transparency of pricing, improved security through authentication and verification and encouraged banks to use application programming interfaces (APIs) for this disclosure of information. This shift to a digital economy will continue and will result in an attraction to a platform where financial data can be used to offer value-added services to other industries. One example would be open finance, an API-enabled offering, now facilitates the sharing of financial products, data, and services between independent parties, going beyond the regulatory requirements set out around open banking. By utilising APIs, financial institutions can implement open finance solutions to offer people greater product choice and control over their finances and data. Repurposing different types of data can amplify the impact of data on economic, environmental, or cultural development, can help fill information gaps and cultivate new perspectives. However, the world is behind schedule on achieving the United Nations’ Sustainable Development Goals. This report will focus on specific targets, however, not all, and consider how environmental, social and governance (ESG) data can be utilised by financial institutions and fintech firms to achieve the SDGs and ensure global communities can migrate to a circular global economy.

26 November 2021 619 downloads

Report

Building the Road to a Hybrid Cloud Future

A recent survey conducted by Finextra and Red Hat showed that 82% of the financial services respondents say they are embracing and implementing hybrid cloud infrastructure company-wide. Many are now deploying open source technologies to support and enhance the inherent capabilities of a hybrid cloud infrastructure, which include agility, resilience, portability, automation, speed to market and continual testing and iterative improvements at speed in isolated, protected environments. The open hybrid cloud adds interoperability to this, and is a factor cited by leading practitioners as increasing their ability to attract developer talent. These attributes, however, will mean very different things to different business stakeholders and will therefore be prioritised in differing orders by different business lines. Speed of development and speed-to-market will likely be of greatest importance to digital programme strategists and developers, whereas portability will be more important to someone leading system recoveries or performance outages, where operational resilience is key. Where these priorities conflict – or complement – each other needs to be identified and communicated to the board, for a cohesive, top-down strategy to be fulfilled with a consistent approach. There will be different challenges in executing that strategy across different parts of the business - there could be gaps in knowledge, understanding or expertise, hence where these challenges lie and for whom becomes a compelling question to answer. Overcoming different hurdles and identifying the different benefits is a key part of a strategy to fully realise the potential of cloud architectures. And all strategies need to take a long-term view – the migration from on-premise systems in bank-owned data centres to a cloud service provider and on through hybrid cloud environments is a dynamic culture shift rather than a quick decision to migrate a few workloads and reap the benefits. Financial organisations need to know and understand the value of what hybrid cloud can deliver to what part of their business and overall operations, and they need to identify the different gaps and challenges in order to achieve the required outcomes. It is no small journey or undertaking, but the benefits can be universally acknowledged as a clear incentive. This research paper from Finextra, in association with Red Hat, is based on several interviews with senior leaders from diverse areas of the banking business to explore and understand some of the key questions around hybrid cloud.

24 November 2021 251 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

The Future of Wealth Management 2022

A sector at the beginning of its digital renaissance. Increased digitisation of goods and services throughout the 2010s gathered pace long before Covid-19 turned the global outlook on its head. The pandemic served only to reaffirm this shift to digital as a matter of urgency. The wealth management sector was not spared the upheaval; however, it appears to be emerging from the crisis with an invigorated sense of progress. The disruptive forces of digitisation and Covid-19 are now joined by a groundswell of consumer expectation. This is clearly witnessed in the soaring uptake of retail investment tools and applications, greater access to financial instruments and widespread revolt against the traditional inaccessibility of financial services. This report, the Future of Wealth Management 2021 with interviews from Accenture, Coutts, Hargreaves Lansdown, Nutmeg, Oxford Risk, Tilney Smith & Williamson, and UBS Global Wealth Management will explore the forces currently shaping the industry. It will examine not only what these forces are, but how and why they form the structural foundation for a sector which is at the very beginning of its digital renaissance.

10 November 2021 1108 downloads

Report

Addressing the Poverty Premium: A data-led approach

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

05 November 2021 295 downloads

Report

Continuous Reinvention: The holy grail of Digital Transformation

Driven by the uncertain macroeconomic environment - and remote working paradigm - that endured throughout the pandemic, the term 'digital transformation' has increasingly been grabbing headlines. Indeed, to stay afloat and remain competitive, financial services firms have been compelled to modernise their solutions. However, as is the case with any kind of technological innovation, infinite reinvention is key, and as such, structural agility has become critical to banks’ transformation strategies. For such a strategy to succeed, however, the migration of banks’ core systems to a resilient and scalable platform in the cloud is vital. To workshop these issues, experts gathered for a Finextra webinar, ‘Beyond 2021 – Why infinite reinvention is key to digital transformation’, in association with Amazon Web Services (AWS) and Capgemini. This impact study explores the findings of that webinar, and examines how firms should go about building an evergreen solution within a modern, cloud-based infrastructure.

03 November 2021 313 downloads

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Open Banking powered by the Cloud, Democratising Finance at Scale

As new business models emerge with recurring revenue in the innovative payments sector, traditional banks are looking to utilise open banking and open finance to assist with their digital transformation. Consumers need real-time, instant, and faster payment capabilities, and with open banking, PISPs are providing alternative methods of payments with a single API connection. Whether banks are providing alternative payments methods or not, this shift to a digital economy will continue and will result in an attraction to a platform where financial data can be used to offer value-added services to other industries. By utilising APIs, financial institutions can implement open finance solutions to improve the customer experience and offer customers greater product choice and control over their finances and data. With a cloud provider, customers can build APIs across multiple microservices that interact with third parties quickly and connect with them in a simple way. Fintech firms have developed open finance solutions that complement cloud-based open API platforms and provide the solutions financial institutions need. With the cloud, financial institutions can scale APIs on demand, pay only for what they consume, and build modern serverless architectures. Building open finance solutions on the cloud requires minimal capex and investing in this technology today will help financial institutions get a step ahead of industry peers. Download this Finextra impact study, in association with Amazon Web Services (AWS), to learn more.

28 October 2021 545 downloads

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Five Factors to consider when building Operational Resilience

The term resilience is receiving a significant amount of airtime in 2021. While the pandemic certainly pulled into focus the need for resilient systems across financial services, the push toward financial resilience was first born in response to the 2008 financial crisis. Since 2008, focus has shifted toward building resilience across operations in the financial services sector, by assessing vital business functions, setting levels of tolerance that these functions can withstand, and testing the tolerances at regular intervals. The Basel Committee on Banking Supervision defines operational resilience as the ability of a bank to deliver critical operations through disruption. This ability enables a bank to: Identify and protect itself from threats and potential failures; Respond and adapt to – as well as recover and learn from – disruptive events. Unlike typical risk management or more traditional compliance-based approaches, when it comes to operational resilience, banks should assume that disruptions will occur – and consider their overall risk appetite and tolerance for disruption. In the context of operational resilience, the Committee defines tolerance for disruption as the level of disruption from any type of operational risk a bank is willing to accept, given a range of severe but plausible scenarios. While the ability to predict which areas are likely to cause disruptions was once the purview of a human supervisor, given the shift to digital operations, it is only logical that firms employ tools such as artificial intelligence (AI) and machine learning (ML) to identify patterns and risks within an institutions’ complex technology systems. This Finextra impact study, in association with BMC, outlines five key considerations that financial institutions must be aware of, ahead of impending regulatory deadlines, as well as the technology-based solutions available to assist them in building a robust and compliant operational resilience strategy.

12 October 2021 252 downloads

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Core Banking on the Cloud - The Catalyst for Innovation, Agility and Efficiency

Traditional core systems that assume a branch interface and retain human-led back offices no longer meet needs. To be truly agile, banks must prioritise interoperability and automation through digital channels to stay competitive and avoid irrelevance. With this focus on digital transformation and initiatives such as open finance, banks are adopting a buy approach to software and infrastructure, especially when running core business applications on the cloud. Today, banks do not have to build customised software when providers have plug and play solutions readily available. Software providers have historically deployed a maintenance model where their customers opt for per-user licenses for a particular service. Now, with SaaS, software can be centrally hosted and delivered through the cloud. In addition, many providers are leveraging AI and ML capabilities, and embedding enhanced omnichannel features. This enables banks to optimise, tailor and deliver consistent customer experiences across digital channels, remove friction, and develop deeper trust. As new technologies open up data streams to and from third parties and emerging startups, banks will be able to offer their customers a range of new products, services and insights that will not only optimise customer experiences, both online and offline, but will create highly personalised, customised relationships. Download this Finextra impact study, in association with Amazon Web Services (AWS), to learn more.

07 October 2021 533 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

Addressing tech skills shortages in financial services

As digitisation increases within banking, financial services and insurance, tech leaders are faced with the task of aligning skills to strategy. Ensuring the learning and development function is positioned in line with business strategy is therefore of paramount importance. Regardless of how much emphasis is placed on acquiring technology solutions and understanding how best to utilise them, if employee training is not aligned with the organisation’s needs, progress will not be made. Homing in on business goals is an efficient starting point. Only then can outlining clear key performance indicators (KPIs) in an intentional manner support the talent strategy. By communicating a business goal to employees and requesting their feedback, talent management can be bolstered by considering behavioural traits, in addition to cultural fits - hiring strong candidates who can make smart decisions. Employers must be asked: what business outcomes do we expect technology skill development to deliver for us? Download this Finextra impact study, in association with Pluralsight, to learn more.

14 September 2021 283 downloads