October 2023

October 26, 2023December 18, 2023 byPriti Gaikwad

Five ways to empower ‘Gig Workers’ with Digital Lending Solutions

The “Gig Economy” has emerged as an increasingly relevant phenomenon in today’s job market. The work model allows professionals to offer their services independently, especially through digital channels, without being tied to traditional job roles. This method offers flexibility and autonomy, simultaneously providing the opportunity to diversify incomes and explore different areas of expertise.

By Ranjan Kumar, Head of Finance & Accounts, RupeeRedee

Ranjan Kumar, RupeeRedee — By Ranjan Kumar, Head of Finance & Accounts, RupeeRedee

With the advancement of technology and the appearance of a myriad of digital platforms, the Gig Economy has attracted a significant number of professionals. Currently, it is expanding at a CAGR of 15% and fostering a robust network of workers ranging from delivery workers, drivers, designers, programmers, and many others.

However, regardless of the nature of work, the lack of financial stability remains a fundamental constant, placing Gig workers in need of robust financial services. The burgeoning potential of this economy space demonstrates the benefits fintech can avail by tapping into this new labour paradigm, offering tailored financial solutions based on the needs of freelancers.

Why Gig workers, specifically?

Gig workers, even though they comprise 85% of India’s workforce, have irregular cash flow and limited access to financial products like credit cards or pre-approved credit lines, and any sudden expenditure can upend their stability.

Income and Wealth Management

Unlike salaried workers, gig workers are subjected to an uncertain flow of income, regular payment delays, or no employee-sponsored retirement or insurance plan to fall back on. Thus, they need to be offered financial services that systematically analyse and offer insights into their income patterns, incorporate fractional savings in their spending patterns, and provide them with education and awareness for the same.

Unique Financing solutions

Due to the unique nature of income patterns, gig workers appear as less credible than salaried workers, which leads to financial products like loans and credit cards being underserved to this segment by financial service providers. Therefore, there is a huge unmet need for hassle-free, low-interest credit, which can be given by employing tools that can assess the creditworthiness of gig workers tailored to suit the nature of Gig work.

Fintechs catering to the financial needs of freelancers

Although the Gig Economy is growing, there is still limited competition in terms of financial services, which provides a unique opportunity for fintechs to position themselves as leaders in this rapidly growing market segment. By focusing on providing tailored financial solutions like specialised bank accounts, financial management tools, and flexible lending options, they can deliver exceptional customer experience earning the trust and loyalty of gig workers.

Data Analysis and Profiling

Fintechs use leading technologies like AI and data analytics to assess credit risk in a holistic manner and gather data that allows them to understand the financial needs of this segment and provide inclusive and equitable financial services to workers in the Gig Economy.

Fintech-powered Tailored Products or Services for Gig Economy Professionals

Considering the scenario of the gig economy, new-age digital lending platforms offer low-installment-based loans that allow borrowers to not worry about immediate repayment and can, in fact, enjoy the flexibility of splitting it over a few days, weeks, or even months. Hence, they still have access to liquidity. In addition, digital lenders leverage business process management systems to automate and optimise internal processes related to the care and support of gig workers by adopting machine learning algorithms that give insight into their financial behaviour.

Furthermore, by implementing ECM systems, digital lenders can easily store, access and organise relevant information, maximising operational efficiency and ensuring data security and confidentiality of gig employees. Apart from this, in order to save money or generate a financial surplus, they offer to store money in an investment instrument at minimum rates that can be liquidated on short notice. Thus, fintech can capture an expanding market and build strong relationships with this new segment.

Future Venture

The future of the Gig Economy holds limitless potential with the development of intuitive interfaces designed specifically for the needs of gig workers. This involves offering income and expense tracking tools, providing clear reports on transactions, and providing access to relevant financial resources, which poses an incredible venture for financial service providers to attract and retain Gig Workers.

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October 21, 2023December 18, 2023 byJeet Vasa

Transforming financial lnclusion through AI and Machine Learning

The financial industry is undergoing a profound transformation, largely driven by the growing influence of Artificial Intelligence (AI) and Machine Learning (ML). Within this dynamic landscape, the FinTech sector has emerged as a trendsetter, spearheading the adoption of AI and ML technologies.

By Rajat Dayal, CEO, Yabx

These advancements are redefining sustainable finance, particularly in terms of financial inclusion, by breaking down barriers that have traditionally hindered access to banking services, such as loans and investment opportunities for the unbanked population.

Credit Scoring and Risk Assessment

Yabx’s innovative use of AI/ML algorithms on raw data has led to the creation of 15,000 features for comprehensive financial profiles of borrowers, highlighting their commitment to data-driven lending. This transformation is pivotal, with credit scoring and risk assessment at its core. These systems leverage a diverse range of data to assess an individual’s financial reliability, effectively reducing one of the key risks associated with lending. Machine learning models have elevated the standards of evaluating an individual’s creditworthiness. This innovative approach empowers banks to expand their portfolios without compromising their risk tolerance, offering loans with a more refined risk management strategy.

Recommendation Engines

In a world where choice is paramount, AI-driven recommendation engines come to the forefront. These engines utilise customer behaviour patterns to provide tailored suggestions for financial products and services, especially loan products that align with the unique needs of each consumer. This bespoke process significantly increases the likelihood of successful loan applications, offering a more personalised and user-friendly experience.

Enhancing Customer Segmentation and Personalisation

AI and ML algorithms are now increasingly employed to enhance customer segmentation and personalisation. The ability to categorise consumers based on their financial behaviours and preferences allows for the provision of tailored loan products with unparalleled precision. This level of personalisation is particularly valuable for microbusiness owners, as it reduces the traditional financial bureaucracy, making borrowing more accessible.

Customer Insights and Market Research

AI and ML technologies offer analytical power, enabling organisations to gain deep insights into market trends and customer behaviour. This foresight equips businesses with the ability to adapt to market shifts and cater to the evolving financial needs of their diverse customer base, ensuring they remain competitive.

Automated Customer Onboarding

Efficiency and customer accessibility are at the forefront of the FinTech process. AI-driven solutions automate identity verification and Know Your Customer (KYC) procedures, streamlining the customer onboarding process. This automation ensures that borrowers can promptly access the financial support they need, free from cumbersome administrative delays.

In Action

An exciting example of AI and ML in action is Zed-Fin Loans, powered by Yabx, a pioneering sustainable banking initiative in Zambia driven by a powerful tri-party LAAS partnership. This partnership allows parties from three adjacent industries to work together to bring micro loans to the market in Zambia. Zed-Fin Loans is a testament to the transformative power of collaboration, technology, and innovation. Their success is a resounding endorsement of AI and ML algorithms, displaying their positive impact on Zambia’s financial landscape.

In conclusion, AI and ML are revolutionising the financial sector, making it more inclusive, efficient, and customer centric. These technologies are breaking down barriers and setting new standards, as demonstrated by the success of initiatives like Zed-Fin Loans in Zambia. The future of finance in Zambia and around the world looks to be very promising, thanks to the collaborative power of technology and innovation.

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October 21, 2023December 18, 2023 byJeet Vasa

What’s next in digital transformation in Europe

In Broadridge’s third annual Digital Transformation and Next-Gen Technology Study, 500 C-level executives and their direct reports across the buy side and sell side from 18 countries were surveyed

Mike Sleightholme, President, Broadridge International

On average, respondents’ firms control estimated assets of $121 billion. More than half agreed that digital transformation is currently the most important strategic initiative for their company, and the proportion of IT budgets allocated to digital transformation has increased to 27% on average, up from 11% last year. A further 71% of global respondents also say AI is now significantly changing the way they work.

The biggest increase in technology investment from European firms in the next 2 years will be allocated to cybersecurity – with respondents saying they plan to increase spending by 29% by 2025. This level of backing is followed closely by investments into cloud platforms and applications. Firms are ‘lifting and shifting’ legacy systems in favour of cost-effective, cloud-based infrastructure with microservices and APIs at the core.

Spending on data analysis and visualisation tools is planned to increase by 26% in the next 2 years. As it stands, too many firms are relying on fragmented data sets that could offer valuable insights if they were brought together and combined with powerful analytics solutions. The top driver for these investments is improved customer acquisition and retention. As market competition increases, the benefits that next-gen technologies can bring to the end-consumer are one of the most significant ways that firms may differentiate themselves from one another.

The second biggest factor in the decision-making process are cost savings and efficiencies. As next-gen technologies mature, the financial benefits become more tangible, making it easier to define a business case for investment.

Finally, speeding up the time it takes to bring new products to market is a priority for European firms and ranks as the third biggest driver for investments. This agility allows firms to take advantage of short-lived opportunities to gain market share in new asset classes or client segments as the pace of change accelerates.

The biggest challenge cited by European firms is insufficient budget for innovation. Particularly against today’s economic backdrop, firms are feeling hesitant to invest money into new projects. The second biggest challenge is staff resistance to constant change. Gaining buy-in from the teams that will be using the technology can be as important as buy-in from the C-suite approving investments. Education is important – firms must ensure their teams properly understand why these technologies are necessary, the efficiencies they can create, and how they will help the team, the business, and clients. The third most prevalent challenge for European firms is ongoing market and economic disruption. Against a backdrop of geopolitical tensions, recession fears and persistent inflation, it can be difficult for business leaders to focus their attention on technology investments.

Digital transformation is still at the top of the C-suite agenda, but it is also entering a new phase driven by more powerful technology. Widescale adoption of generative AI, as well as growing maturity in blockchain and DLT, will drive a new wave of exponential change. Other nascent technologies such as quantum computing and the metaverse are on the horizon.

When asked about the longer-term future, 65% of European firms believe that blockchain and DLT will become the core of financial markets infrastructure in 10 years’ time. Nearly a third believe that the metaverse will become a key channel for client interaction within the next 10 years. However, firms said they only plan to increase investment in the metaverse by 4% over the next 2 years, indicating a wait and see approach.

This is an exciting time for the financial services industry, adapting to the rapid pace of change may pose huge challenges for business and society, senior leaders should keep a firm eye on the opportunities created by digital and next-gen technologies as they evolve.

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October 21, 2023December 18, 2023 byJeet Vasa

Embracing technology to navigate economic turbulence in the financial services sector

Guy Mettrick, VP, Financial Services at Appian

Today’s dynamic financial landscape has exposed the vulnerabilities of the financial services sector and shattered preconceived notions about banks’ regulatory resilience. The rapid collapse of once-revered institutions highlights the fragility of the banking sector in the face of economic turbulence and unforeseen market shifts.

With analysts scrambling to dissect the factors behind these failures, it is crucial to consider the broader implications for the financial services industry and the potential ripple effects on the overall economy.

Guy Mettrick, VP, Financial Services at Appian

Adaptive strategies for growth and innovation are becoming increasingly important amidst a background of stricter risk management, reduced lending, and increased regulation. To navigate the unpredictable path ahead that is defined by tightening regulatory frameworks and resource limitations, agility is key.

Balancing regulatory challenges

Mounting regulations driven by factors such as climate change and the push for enhanced compliance are forcing businesses leaders to reconsider their organisation’s strategic approach. The prominence of environmental, social, and governance (ESG) objectives in the financial services sector requires increased attention and significant investments in human resources and technology.

While these circumstances may lead to scaled-back growth aspirations, cost-cutting initiatives and deferred investment decisions, they also present transformative opportunities.

Leveraging technological advancements

During economic uncertainty, technology emerges as a powerful force within the financial services landscape. When it comes to expediting client onboarding, enhancing customer service, and facilitating seamless communication between financial institutions and their clients, automation proves indispensable. Automation enhances process efficiency and efficacy by eliminating manual tasks and minimising errors. Advanced technologies like artificial intelligence, robotic process automation, and process mining empower financial organisations to drive innovation within complex frameworks.

With automation, firms can facilitate real-time reporting and audits that provide tangible evidence of control effectiveness by embedding risk controls directly into their processes. In an era of increasingly stringent regulatory frameworks, this proactive approach to compliance proves invaluable.

The rise of data fabric

One emerging trend is the adoption of enterprise-wide data fabric, project by Market Watch to grow from $1.71 billion in 2022 to $6.97 billion by 2029. Data fabric streamlines the consolidation of data from various systems, a process that has traditionally been challenging and costly. This integration eliminates the need for data migration – a critical prerequisite for successful process automation.

Data fabric seamlessly connects and harmonises existing databases. This breaks down data silos and enables a cohesive and compliant framework that consolidates all relevant data sources. Within the financial services sector, this technology facilitates easy access to vital components such as risk governance policies and customer data.

Financial service providers must adopt adaptive strategies and embrace technology to effectively manage risks, regulations, and growth during an economic downturn. Regulation should not be perceived as a burden. Financial institutions should view technology, particularly process automation, as a catalyst for growth. Automation and data fabric enable these organisations to navigate complexities, streamline operations, and enhance customer experiences. Rather than succumbing to challenges, financial service providers can leverage technology to foster innovation, ensuring resilience in the face of economic uncertainty.

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October 21, 2023December 18, 2023 byJeet Vasa

Is regulation enough to propel Open Banking adoption?

Recently, the European Commission set out its intentions to advance open banking with the introduction of PSD3. The update to its Payment Services Directive (PSD2) shows a commitment from the EU to realise the potential of Open Banking, and it’s one welcomed by the industry.

Hans Tesselaar, executive director at BIAN

While PSD3 sets out several key changes to realise its goal of driving Open Banking adoption forward, the aim to standardise payments across the EU with its move from a directive to a regulation poses the question: is widespread adoption possible with regulation alone?

The benefits of regulation

A new Payment Services Regulation will update and replace elements of PSD2 to ensure its rules are applied more consistently across Europe. This new regulation will bolster Open Banking by enforcing better API functionality, allowing smoother payment data sharing and eliminating unnecessary steps hindering data flow.

Apart from refining PSD2, these proposals enhance user control via a centralised dashboard, ensuring easier management of data sharing. In addition, new measures like increased bank cooperation will support the industry’s attempt to combat fraud and elevate consumer confidence.

This regulation puts FinTechs and banks on a level playing field, giving technology providers more control over the service they provide to customers through easier and more secure data sharing, while reducing infrastructure costs.

Europe is not the only country taking a regulatory approach. The UK for example, a pioneer in Open Banking innovation on a global scale, has been prioritising regulation since the launch of Open Banking in 2017 by the Competition and Markets Authority (CMA) following the introduction of PSD2. Now, its recent announcement from the Joint Regulatory Oversight Committee, regarding its commitment to a long-term regulatory framework, reaffirms its commitment in the area.

While these regulatory measures allow fintechs and banks to implement Open Banking more effectively and aim to give customers a seamless experience, independent regulation does limit innovation without the correct considerations.

The realities of regulation

The state of open banking is still very immature, but there is no denying its growth. The number of users worldwide is forecast to reach 132.2 million by 2024, a significant increase from the 24.4 million users in 2020.

Countries like the UK risk reducing their role as a driver of progress without the access to the wider European population that it had before Brexit, as an example. And as the European market is predicted to be the largest open banking market by 2024, the continent as a whole would do well to collaborate to better understand customer needs, react to market demand and expand further.

Being open to learning from global examples and listening to industry leaders, including larger banking institutions with global influence and international exposure, will be important to ensure successful practices are promoted, which will encourage open banking more widely within these countries and different regulatory frameworks.

Meeting the demand

Focusing on regulation must not overshadow market demand, and looking at countries with a market-driven approach, such as Singapore, will reveal what governments and organisations should be prioritising when it comes to open banking.

Singapore’s market-driven stance has led to high open banking adoption. 90% of professionals consider open banking either a ‘must have’ or ‘important’ and a further 90% agree that it has also had a positive impact on the industry and made it more collaborative. This is despite no mandatory requirements.

Adoption has accelerated in APAC over the past few years due to the opportunity it has to make the industry more collaborative and the potential to bring about fairer and more equal financial services. However, the space remains in the early stages of development. Many banks are just starting their digital transformation journeys, and struggling with core legacy systems and closed or outdated architectures. This is why overcoming these barriers and industry collaboration will be at the heart of open banking adoption.

Coreless banking

Regardless of a regulatory or market-driven approach to open banking, banks must create an ecosystem with fintechs, providers and aggregators. This is to boost the speed at which best-of-breed products can be implemented to meet customer demand and make the most of the opportunity that lies within the open banking space.

A coreless banking solution will be key to empowering banks to overcome issues around interoperability and selecting the software vendors needed to obtain these best-in-class solutions for each application. In turn, this will promote industry collaboration and ensure customers are provided with the optimum service to further encourage open banking adoption.

Coreless banking implies that each of the needed (IT)-services works seamlessly together. If this is established, financial institutions can migrate to a “best of breed” environment so they will have the ability to utilize and combine third-party solutions to deliver the best open banking services for their customers.

This means banks can focus on incorporating the technology they need to enable open banking services and respond to customer demand – regardless of whether this is from a regulatory or market-driven starting point – at a faster and more efficient pace.

The answer lies in collaboration.

Is regulation enough for open banking adoption? The short answer is no.

Whether countries decide to push open banking from a regulatory standpoint, or adoption is driven from the market demand, industry collaboration will be the answer. This will enable greater innovation, so from PSD3 in Europe, to Singapore’s market demand, the industry can unlock the ultimate outcome for open banking with an open attitude.

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October 21, 2023December 18, 2023 byJeet Vasa

Bridging the Gap: the crucial role of last mile data integration in financial services

Financial firms worldwide are striving to achieve last mile data integration, a process that seamlessly integrates data into business workflows and puts it at the disposal of business users. The goal is to eliminate the need to search through databases or data warehouses for required data, allowing easy access for reporting and financial models, and enabling better decision-making.

By Martijn Groot, VP Marketing and Strategy, Alveo

Financial services firms spend material amounts on acquiring and warehousing data sets from enterprise data providers, ESG data companies, rating agencies and index data businesses.

However, when this data is not readily available to business users or applications where it impacts decisions those investments will not deliver the return they should be. For many financial services businesses, last mile data integration represents a missing link in ensuring they are optimising the value they obtain from data. The volume of data they need is continuously growing and the bills they face for acquiring it are therefore going up in tandem.

Activating data assets

Ultimately, firms will not get the best out of their investment in data, if they don’t have a way, first, to verify it, and second, to land it into the hands of their users or enable users to self-serve. If the data is conversely, still sitting in a database that is hard to get to, or needs skills to access, then the business will not achieve maximum value from it.

That in a nutshell is why last mile data integration is so important to them. Achieving it does however come with challenges. Organisations must establish efficient data onboarding processes and transform data sets to meet diverse technical requirements common in their applications landscape. Additionally, maintaining high service levels and responsiveness to requests for new data to be onboarded is vital to build trust and keep business users engaged.

So how can all this best be achieved? The key is efficient data management. To use an analogy, financial data management can be seen in the context of the human body, with the need to manage data flows analogous with the circulation of blood through the arteries. Data gushes in from internal and external sources.

It needs to be cleaned and a process of data derivation and quality measurement applied and then we see the end result in the form of validated and approved data sets. The overall flow often stops at that point for financial services organisations. But such an approach is incomplete in that it actually ignores last mile data integration. Data may be flowing through the arteries of the organisation but it is not reaching the veins, and capillaries.

That’s where the key step of distribution comes in. This not only enables easier access to the data in whatever format required by lines of business within the organisation but also to set up exports or extracts of relevant data in predefined views or formats that then flow easily into business applications.

Maximizing data ROI

Financial sector organisations understand the need to do this but often they end up doing it in a way that involves a lot of ad hoc manual maintenance at the individual desktop level, which means that process get out of sync; data becomes stale and there is the danger of duplication. All this inevitably ends up impacting the quality of decision-making also.

Effective last mile data integration is an automated process that involves identifying relevant data sources, mapping and cleaning the data and then transforming and loading it into the target system and using data quality and consumption information in a feedback loop. The key to this process is making it easy for the specific business user. It is about understanding the kinds of taxonomies and nomenclature the user is expecting and then being able to mould, build and shape the data being presented in a way that best suits that user.

Financial services firms that get all this right will be well placed to unlock the full potential of their investment in data and maximise the ROI on the data they purchase. Ultimately, by delivering on this process and verifying and making data readily available to users, organisations will put themselves in the best possible position to make informed decisions, streamline operations, and position themselves for ongoing success.

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October 21, 2023December 19, 2023 byJeet Vasa

The rise of eCash: Why more consumers are using cash online

Megan Megan Oxman, Interim President Digital Wallets at Paysafe — Megan Oxman, Interim President Digital Wallets at Paysafe

Here’s how using cash online helps customers take control as they manage online security concerns and economic uncertainty. According to our Lost in Transaction 2023 payment trends research report, the number of consumers using cash online is growing, and quickly.

By Megan Oxman, Interim President Digital Wallets at Paysafe

In fact, eCash, which enables consumers to generate a barcode and pay offline at a conveniently-located store, is more popular than at any other point since our Lost In Transaction research series began in 2017.

Now, 31% of people who used cash online in the previous year are paying with it more often than they did 12 months ago. So what’s driving this growth, and how can businesses help customers embrace this increasingly popular payment method?

How popular is eCash?

Overall, 30% of respondents who used eCash in the past year say it’s their preferred way to pay online. This makes it the fifth most popular online payment method after debit cards, credit cards, digital wallets such as Skrill or NETELLER, and credit cards stored in Apple Pay, Google Pay or a similar mobile wallet.

And many of those who use cash online, rely upon it: 23% of respondents who say eCash is their preferred payment method would abandon their cart if they can’t pay with it. Put simply: businesses may lose customers if they don’t provide this payment method.

Why are consumers using cash online?

The greatest drivers in the growth of using cash online are the rising cost-of-living and concerns about online security. In times of economic uncertainty, consumers often turn to cash to help them exercise more control on their spending and stick to a budget.

With eCash becoming more widely available as purse-strings tighten, it’s no surprise that consumers would take the opportunity to take this money-saving technique digital. Now, more consumers are using cash online to control online spending just as they use physical cash to manage their outlay in stores.

It’s telling that, while eCash usage has increased across the board, the spike has been greatest among respondents who changed payment habits due to the cost-of-living crisis, with 60% using eCash more often. The budgetary benefits of using cash online are not to be underestimated.

eCash offers a secure online payment alternative

Our research also found consumers view eCash as a more secure online payment option, particularly when it comes to online video gaming and iGaming. Almost half (49%) of respondents who pay for online gaming told us cash-based methods are the safest way to make online purchases.

As to why this is the case, eCash payments don’t require consumers to share any financial details online — a key concern about ecommerce, with 52% of respondents explaining that they don’t feel comfortable sharing financial details online.

eCash and the bottom line

Businesses should be looking to incorporate a number of different payment methods to cater for consumers’ needs, and eCash can be fundamental to satisfying both budgetary concerns and settling nerves around security.

The right payment platform can enable businesses to do this – helping to meet customers’ needs by allowing them to take control of their spending and their personal data.

To learn more about why a growing number of consumers are using cash online, check out our Lost in Transaction 2023 report.

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October 21, 2023December 18, 2023 byJeet Vasa

Banks have the Generative AI advantage, but must overcome challenges to fully utilise its benefits

Despite the many challenges the industry has faced, the banking sector has continued to prioritise digital transformation and it is only accelerating quicker. Generative artificial intelligence (AI) is the latest in a wave of disruptive technologies that will drastically transform the financial services and banking industry.

By Jay Limburn, VP of AI Product Management, IBM

Many banks and financial institutions are as good as, if not better than most industries when it comes to technological maturity. We have been working on generative AI with banks for several years, and they have been experimenting with the operational advantages of AI across their business. The IBM 2023 CEO Decision-Making in the Age of AI report showed that 75% of CEOs surveyed believe the organisation with the most advanced generative AI will have a competitive advantage. However, executives are also concerned about the potential risks around security, ethics and bias.

Leaders are looking to fuel their digital advantage to drive efficiencies, competitiveness and customer satisfaction, but they have not been able to fully operationalise AI as they face key challenges around implementation.

The biggest challenge and opportunity…data

Banks are continuing to digitally innovate, and data has emerged as one of the biggest challenges to fully utilising generative AI across the industry. Platforms like ChatGPT caught people’s imaginations and created excitement in the sector. But while they rely on Large Language Models (LLM) to analyse vast amounts of data, the banks need to be able to choose from multiple models and embed their own data sets for analysis.

Instead of having one model to rule them all, banks will need to evaluate which models can be applied to their individual use cases. Banks are aware of the benefits generative AI can bring, so in place of summary capabilities of what the technology can do, they need to look at how to modernise different elements of their business. This requires models to be trained on the bank’s own data sets to get high-level accuracy and to fully operationalise the technology.

The amount of data is overwhelming many organisations, and banks are not excluded. To succeed, financial institutions will need to embed their own data into generative AI models to fully operationalise the technology.

Banks can help shape regulation and governance

One of the other key challenges facing banks with regards to generative AI is regulation and governance. As a new and emerging technology, regulators will not necessarily understand AI, so the natural inclination is to say we cannot use it. Equally, some models cannot explain why it has made a decision. For trust and compliance, financial institutions need to explain their decision-making process.

The more AI is embedded into organisations, the more important it is that leaders have a proactive approach to governance, which means having a legal framework to ensure AI is used responsibly and ethically, helping to drive confidence in its implementation and use.

But in order to help shape the AI regulatory environment and meet these requirements, banks need to take an active part in shaping the regulatory framework and move to models which can explain the decision-making process.

Generative AI will help not lead

The response we have seen from banks to generative AI has been phenomenal. As an industry, financial services and banking can lead the charge around AI regulation and explore new models to leverage their own data for better outcomes.

However, this isn’t without its challenges. Operationalising generative AI has proved difficult due to potential risks, compliance and evolving regulatory requirements, and concerns would be heightened as banks introduce their own data to AI models – which is why most generative AI use cases have so far focused on the customer care space.

Despite these challenges, banks have a huge opportunity to leverage generative AI, which will fundamentally change how we bank and how banks serve customers, and governance will play an active role in ensuring trust as we continue to explore the benefits of generative AI. Importantly, AI is here to help banks, not be the lead in most use cases.

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October 21, 2023December 18, 2023 byJeet Vasa

eCommerce is no longer possible without web scraping and big data

Studies have shown that companies that use data are almost 20 times more likely to be successful and have more than 50% better understanding of their customers. As a result, web intelligence is becoming increasingly important for businesses that rely on data, particularly for platforms that use publicly available data to analyze competitors, track customers, and generate leads.

By Gediminas Rickevičius, VP, Global Partnerships at Oxylabs

Web scraping and big data are essential for any eCommerce business allowing companies to glean insights from their competitors and provide the most up-to-date information on pricing, promotions, and market trends.

Changes in the retail landscape

In the US, the number of traditional retail stores dropped from over 450 thousand to nearly 350 thousand in 2021, with only a slight 2% increase in 2022. Although brick-and-mortar shops are slowly recovering after Covid, the increasing rent prices and cost of living are bringing new challenges to these businesses. It is estimated that over 50% of sales this year will be processed through digital platforms, ensuring the long-term viability of ecommerce.

The shift to online shopping revealed the need to get to know the growing number of customers better and faster. Competitiveness will only continue to grow, forcing companies to collect as much information as possible. Often it is understood that more data means a stronger business.

Big data – the driver of eCommerce competition

With the rise of accessible analytics tools and data-driven marketing strategies, eCommerce companies now have the advantage of tracking customer behavior more accurately. As a result, they are better able to tailor their services and products to meet customers’ exact needs and outplay their competitors in the process.

In the ecommerce world, big data is driving competition in a number of ways. By understanding customer behavior and preferences, retailers can better target their marketing efforts and personalize shopping experience to increase conversion rates. Additionally, companies can utilize advanced analytics to identify patterns and trends that can give them a competitive edge.

Data is also changing the landscape of pricing in eCommerce. Real-time data enables retailers to track competitors’ prices and adjust their own to stay competitive. Furthermore, dynamic pricing algorithms that take into account a variety of factors are becoming more common, further removing traditional price barriers.

Getting to big data with web scraping

Every day, approximately 2.5 quintillion bytes of data is created, and this deluge of information can be overwhelming for businesses, but it also presents a unique opportunity. Those who are able to harness this data and use it to their advantage will be well-positioned to succeed in the ecommerce competition.

Companies can make sense of this abundance of data and turn it into an advantage by creating a map of their competitor’s ecosystems. This involves not only identifying direct competitors but also analyzing their relationships with other players in the market.

Web scraping allows companies to quickly gather data about competitors’ assortments, observe what new products are appearing and disappearing, monitor price changes, and from that, observe their competitor’s strategy and learn. All this information can then be used to create a map of the competitive landscape, which can be valuable for a variety of purposes, such as:

Market trends analysis. Allows analyzing the introduction of new products and technologies, changes in market conditions, and shifts in customer preferences. By staying abreast of these changes, businesses can adjust their strategies to stay competitive and take advantage of new opportunities.

Competitive intelligence. A competitive ecosystem map can help a company to stay informed about its direct competitors, suppliers, as well as any other companies that might be vying for their customers’ attention.

Strategic planning. A competitor ecosystem map allows businesses to visualize the competitive landscape and better understand their competitors. This involves not only identifying direct competitors but also analyzing the relationships between competitors and other market players, such as suppliers, distributors, and customers. This can help businesses identify potential new partners, suppliers, and customers, as well as potential new threats.

By having a comprehensive understanding of the competitive landscape, companies can develop strategies to expand their market share.

Conclusion

eCommerce companies can no longer afford to operate without web intelligence and big data. These information sources are essential for staying competitive in today’s digital marketplace and for making data-driven decisions that will drive growth and profitability.

The competition relies heavily on the availability and utilization of data. A superior understanding of the information gives a permanent and comprehensive edge to a player. When one participant gains this advantage, the others must also adopt it to remain competitive. Otherwise, they will eventually be at a disadvantage in the long term.

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October 21, 2023December 18, 2023 byJeet Vasa

Surviving and Thriving: How Indian FinTech start-ups can insulate against funding winter

A funding winter is a period of reduced venture capital funding during which investors become cautious and risk-averse, resulting in a lack of funds for new businesses. The global economic meltdown has had some knock-off effect on the Indian FinTech industry as well. But the rate of adoption of Indian FinTech is still rising and shining. As per the Economic Survey 2022-23, Indian FinTech companies witnessed a staggering adoption rate of 87% across various sects of users including the underserved and those who belong to the bottom most stratum.

By Rahul Tandon, Chief Product Officer, Safexpay

This beats the global average by 23%. With over 2100+ FinTech companies, India is the third-largest FinTech ecosystem in the world. Despite the challenges, Indian FinTech start-ups attracted investments worth $1.2 billion in Q1 2023, a sharp jump of 126% compared with $523 million raised in Q4 of 2022, according to a report compiled by market intelligence platform Tracxn.

However, the total funds raised were 55% lower than $2.6 billion raised in Q1 2022. The number of funding rounds in Q1 2023 also experienced a drop of 77% and 39% against Q4 2022 and Q1 2022, respectively. The ecosystem has remained resilient, promoting innovation, improving operational efficiency, and prioritising regulatory compliance to succeed.

FinTechs Modifying Business Model

In the Indian financial services industry, partnerships have played a vital role in sustaining operations and generating cash flow. To adapt, businesses have adjusted their models, forming alliances and collaborations. FinTech companies often collaborate with banks, NBFCs, and insurance firms, leveraging their customer base and accessing resources. Such collaborations enable them to expand their offerings, such as digital lending platforms and payment solutions. FinTechs have also taken steps to conserve cash by scaling back on activities like marketing, prioritising cost-effective approaches. By aligning expenses with revenue streams, start-ups aim for sustainable growth and attracting investor interest.

Innovation is not only in products and services but also in business models. The reason being that entrepreneurs often get funding in a 12-18 month period, those who have not secured consecutive rounds of funding may have a limited runway. As a result, it is critical for FinTechs to run a business, which is sustainable and open to adaptation. Overspending on client acquisition and other unnecessary areas could be fatal for the growth and sustenance of the business. Focus should be on improving unit economics and being conservative with the initial funding. Start-ups, especially in FinTech, can boost their prospects of long-term success by implementing these actions.

Fostering Innovation

Innovation has been a driving force for Indian FinTech start-ups to attract investors and differentiate themselves in a highly competitive landscape. These start-ups have embraced cutting-edge technologies and developed innovative solutions to address the evolving needs of consumers. For instance, they have leveraged artificial intelligence, machine learning, and blockchain to create secure and efficient financial services platforms.

Government support has played a crucial role in fostering a culture of innovation and securing funding during challenging times. The Indian government has introduced initiatives like the “Digital India” campaign and the “Start-up India” program, which provide support and incentives for FinTech start-ups. Such government initiatives have encouraged entrepreneurs to develop innovative solutions, attract investors, and contribute to the growth of the FinTech ecosystem. Furthermore, ongoing innovations such as differentiated banking and insurance licenses, the introduction of Central Bank Digital Currency (CBDC), the implementation of Account Aggregator, the emergence of the Open Credit Enablement Network (OCEN), the integration of Digilocker, and the establishment of the Open Network for Digital Commerce (ONDC) are fuelling continuous progress in the sector.

Enhancing Operational Efficiency

Indian FinTech startups recognise the importance of optimising their operations to save money and exhibit profitability potential. Leveraging technology to increase operational efficiency is a key strategy for fintech companies. By automating manual processes, implementing artificial intelligence and machine learning algorithms, and utilizing big data analytics, FinTech firms can streamline their operations and reduce costs. For example, digital on boarding processes can significantly reduce the time it takes to open an account or process a money transfer. Additionally, chatbots can provide customer service around the clock, freeing up staff time for more complex tasks. These innovations not only lower operational expenses but also improve consumer experience, attracting a wider user base.

Credibility and Regulatory Compliance

FinTech and payment companies in India face a complex and evolving regulatory environment. Compliance requirements include obtaining licenses, adhering to data protection rules, complying with AML and KYC regulations, ensuring secure technology infrastructure, maintaining accurate records, submitting reports to regulators, and undergoing audits.

For FinTech start-ups to receive finance, trust and regulatory compliance are critical. They realise the need of preserving clients’ data, employing effective security measures, and adhering to relevant regulations. With data breaches and privacy concerns on the rise, start-ups have prioritised data security measure while maintaining transparency and responsibility in their operations.

Furthermore, forging solid alliances with banks, financial institutions, and regulatory agencies boosts the legitimacy of the whole ecosystem. Collaborative efforts to build regulatory frameworks, encourage responsible lending practises, and defend consumer interests foster a trust and confidence ecosystem.

The future of regulatory compliance in Indian FinTech and payments looks promising with the government’s push towards digitisation and financial inclusion. The apex bank has been working towards creating a more robust regulatory framework to ensure that the growing FinTech industry remains compliant with regulations. One of the key initiatives taken by RBI is the creation of a regulatory sandbox, which allows FinTech companies to test their products in a controlled environment before launching them in the market.

Way forward

The future of Indian FinTech industry is in position for growth and resilience, overcoming the challenges posed by the funding winter. To attract investor interest, FinTech companies should adapt their business models, forge strategic partnerships, and prioritise sustainable growth. Innovation will remain a crucial factor in setting them apart from competitors, with a focus on building scalable and profitable enterprises while optimising operational efficiency through technology integration.

Upholding credibility and regulatory compliance become paramount, encompassing data security, transparency, and responsible practices. By collaborating with banks, financial institutions, and regulatory bodies, FinTech firms can foster a reliable ecosystem. With government support and regulatory initiatives, the future looks promising for the Indian FinTech and payments industry, as it continues to drive financial inclusion and digital transformation across the nation.

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