IBSi Blogs

Accelerated changes in the lending industry are reshaping the competitive landscape of loan origination. Borrowers have come to expect the same immediacy in applying for a loan as they do when online shopping for goods or entertainment.

by Brandi Hamilton, Director Marketing Communications, Equifax

Financial institutions (FIs) of all sizes are working diligently to adapt to new customer expectations of speedy and efficient transactions, as well as a fair chance in the lending approval process. Incorporating automation and cloud technology into the lending process will allow FIs to gauge loan repayment propensity more efficiently and allow lenders to say “yes” to more loan applicants.

There are four lending trends that will help FIs create a frictionless loan origination experience for borrowers, while also asserting themselves as industry leaders.

The very meaning of having a job is changing

The workforce has become more mobile, embracing the concept of employees working from home — allowing leeway for traditional employees to take on freelance work or start small businesses to earn additional income. Some have left the traditional workforce altogether and are pursuing solopreneurship full-time. People with jobs are quitting them en masse, and for the 30 to 45 age group — the largest cohort of homebuyers — resignation rates were up more than 20 percent from 2020 to 2021. Many workers simply do not want to return to the office. They may also be quitting for various reasons: to look for a new job, join the gig economy, or forge their path as an entrepreneur. The shift was perhaps triggered by the coronavirus pandemic and the resulting move to remote work, but it is here to stay. The unpredictable nature of their income complicates these consumers’ financial capacity and how FIs can measure their ability to repay loans.

With potential borrowers diverting away from multi-year histories of job stability and high credit scores, FIs must expand the scope of creditworthiness. Lenders should consider that changes in the way people work do not always equate to loan affordability issues. Borrowers with complex employment profiles should not be denied financial equality due to outdated methods for an individual’s propensity to repay loans.

Financial inclusion

Many Americans who are entering the workforce for the first time face a Catch-22: they can’t get credit because they don’t already have credit. Others are seeking to recover from damage to their credit records because of an extended period of unemployment, family changes, or other life events. By considering alternative data for determining creditworthiness, lenders can foster greater financial inclusion.

Financial inclusion leads to FIs attracting diverse groups of borrowers across all generations, regardless of their credit file. “Thin file” or “credit invisible” applicants face higher rates of denial amongst underserved demographics.

FIs embracing alternative data will allow expanded access to credit inclusion through tailored digital experiences that better serve marginalized communities and those with unique circumstances. Ensuring underserved consumers aren’t continually left without access to credit and capital can be a critical step to financial inclusion.

Fortunately, there are a few easy ways for lenders to address more financial inclusion for all — while reaping the benefits along the way. And it all starts with data.

Alternative data and APIs

Historically, consumers had less access to credit and data information. But today, collaboration and access technologies enable third-party access to personal account data through application programming interfaces (APIs). This open data exchange allows fintechs, banks, and third-party providers to share financial data through a digital ecosystem that requires little effort. These instant and seamless data transfers enable consumers to get loans faster and more efficiently.

APIs and the use of alternative data also create opportunities for potential borrowers by narrowing the space between traditional banking and lending and the evolving fintech category. For example, FIs can expand their use of data to capture more accurate financial strength indicators, resulting in lenders having the ability to say “yes” to more applicants while reducing risk and default rates and improving operational efficiencies.

This holistic view potentially enables an untapped demographic of quality borrowers to get approved for loans, establishing security and wealth development for underserved communities.

Low friction lending could mean improved customer experience

When it comes to lending, many borrowers demand the same speed when applying for a loan as they do when they make purchases with large online retailers. Automating loan origination tasks and processes allows for a fast, flexible, low friction lending process that feels easy and convenient. In addition, evolving consumer trends and preferences mean lenders should continue to streamline processes and leverage data to meet consumer expectations. Banks leveraging these and other technologies can reduce the number of steps consumers may encounter applying for a loan – filling out a cumbersome application, contacting employers to provide proof of income and employment, or providing sensitive banking log-in or payroll credentials to share data.

Having automated and secure technology solutions integrated during decisioning can reduce the need to request sensitive banking log-in credentials or outdated paper-based processes. As a result, some applicants may walk away from business transactions that inconvenience them. Adopting a digital lending process that attracts diverse borrowers across all generations, regardless of their credit file, and providing exceptional lending experiences is key to surviving the evolving lending landscape.

Keeping up with these consumer trends will better equip FIs to serve their borrowers’ unique circumstances better. A positive and fast borrower interaction without friction is critical to FIs reaping success. Lenders that meet the demands for a digital-first, frictionless experience and incorporate open data will become preferred lenders of the future.

Recently we have seen unprecedented movements in the financial markets. With the crypto crash and the recent stagnation of the stock markets, some have been left scrambling to recoup their losses.

by Roger James Hamilton, Founder and CEO of Genius Group 

Globally, Governments have been spending big on stimulus packages, and inflation has hit record numbers. We are living in unprecedented times, and we are heading into what experts agree is a highly unpredictable future for investors and businesses.

Yet, in times of the greatest crises lie major opportunities. Now is not the time to continue with the same investment strategies you had been doing prior to 2022. Here, we look at 10 key investment trends that every investor should know. 

Dollar destruction

Due to the recent pandemic, 35% of all U.S. Dollars in existence have been printed in the last 10 months. But endlessly printing money does not help economies and creates further divide in the wealth gap.

With inflation soaring and money being worth less and less, banks around the world are predicting a recession towards the end of 2023 and early 2024. This recession is said to be worse than we have previously seen with things getting worse before we start to see any recovery.

To combat inflation there is actually very little a country can do other than printing more to make the physical currency more expensive to store and move. But by doing this interest rates increase, which can then in turn lower growth. These economic trends are currently playing out, with Deutsche Bank recently informing investors that they are expecting the worst recession in history to hit in late 2023.

The Age of Exponentials

At the beginning of Society 5.0, the imagination society is coming into play, where digital transformation and creativity from a diverse population will accelerate technological growth and adoption. Big data harvested by IoT and converted into a new type of intelligence by AI, will impact every corner of society and change our infrastructure for the better. People will see their lives become more comfortable and sustainable as they are provided with the products and services in real-time, as they need them. Investments will be focused on the future with any disruptive or innovative technology being lucrative.

The Meme Generation

As individuals using memes became viral it was then realised this pathway could lead to becoming an influencer which can be a lucrative job with some people becoming multi-millionaires from it. Meme investments using products or brands do a similar thing and are created to attract retail investors to invest in the company stocks and shares. This idea that a simple meme can create huge visibility for a brand is one that takes skill but can be worth the investment as it’s a quick way to get brands in front of a huge audience.

The DeFi economy

Historically we’ve used various different devices for different uses, think video cameras, cameras, CD players and the radio. Now we have just one device – our phones to do everything. The same is happening with services, think taxi ranks that are now being replaced with Uber or Google replacing libraries. Everything is becoming streamlined and minimised. The same is happening with financial services where the decentralised system has fewer transaction points and middlemen. Ethereum could displace many traditional financial services and its native token Ether could compete as global money.

Stocks & Crypto Trading

Traditional currency is being taken away from the individual at source via taxes, bank charges, the rising costs of goods and currency debasement. Investing in stocks and crypto can give you returns of around 5% to even 15% if you just have the strategies to invest wisely. When you then add money each month you may well see your profits grow via the power of compounding.

Marcus De Maria, Founder and Chairman of Investment Mastery, comments: “The recent crypto crash has been difficult for the industry and the death of crypto has been bandied around so many times, but we have never seen it actually fail. Many investors will see this as a huge opportunity if you buy it low; you stand to see a massive % increase as it goes back up. This is the fundamental strategy we use when investing – we invest when prices are low and aim to have a really low average value across our portfolio.”

The Digital Decade

Everything that we do is being digitised and will encompass society 5.0.; in the digital decade, this will be apparent through a digital overlay on your day-to-day experience. The revenue from the virtual world could approach $400 Billion by 2025. Global gaming and AR and VR markets will drive this growth. Investing in these areas or companies that are implementing these technologies is a good idea as they are likely to see huge growth over the next few years.

The Rise of Robots

Automation will empower humans and increase productivity and wage growth. It has the potential to shift unpaid labour to paid labour and Cathie Wood, CEO of Ark Invest believes that automation will add 5% or $1.2 trillion to US GDP over the next 5 years. The metaverse and the gaming industry are driving the change of automation. AI and ML will help this change happen as we will see automation get smarter and take on volumes of information that would take humans much longer. We will see companies using AIs as their CEOs and they will be making better and smarter decisions.

Genius Generation

Entrepreneurship will become a vocation and will be taught in school and as a preferred option for employment by 2025. This is what Genius Group believes and is forecasting for the industry.  Edtech will continue to improve people’s skills, wealth, and life chances with more education available to a wider demographic. The UN sustainable development goals will be met by people and companies who have invested in themselves and in the future.

Wholesale Investing

By teaming up with other like-minded groups or collaborators, investors can access a vast new area of wholesale investing. As with purchasing wholesale, the price is usually cheaper as you are buying in bulk, and you are able to find market opportunities that wouldn’t usually be open to an individual.

If you take the idea of retail or the stock market, you are buying at price, whereas when you team up with others there are new offers that are available to you. Using the power of the crowd you become an insider rather than an outsider.

Time for Impact

Buying property has always been a popular investment and given that the population is growing, and property won’t ever go to zero, banks are happy to lend. When growing a property portfolio, you can make infinite ROI by releasing money as the property increases in value, which leads to a tax-free cash-back to invest in the next property.

Simon Zutshi, CEO of CrowdProperty, says: “For those that can’t afford a whole house, it is still possible to invest in property via a group scheme or crowdfunding. The members of property investors network (pin) have benefitted from this form of investment and have even said that investing in this way can see better returns.”

The Online Safety Bill, a landmark piece of legislation which has been five years in the making, has stirred up a lot of debate in recent weeks.

by Martin Wilson, CEO, Digital Identity Net 

It is designed to lay down in law a set of rules about how online platforms should behave to better protect their customers and users. The bill covers a wide range of issues including the spreading of illegal content, protecting children from harmful material and protecting individuals against fraud.

Even before its introduction, various parts of the bill were drip-fed via the media, such as measures to protect people from anonymous trolls, protect children from pornography and stamp out illegal content. Each development was met with intense scrutiny.

And since its introduction, this has continued with many current and former politicians, tech execs and business leaders sharing their views on the bill described by the UK government as ‘another important step towards ending the damaging era of tech self-regulation’.

But is it enough to protect people online?

Welcome change

The rules the bill sets out to change have needed updated for a long time. The bill brings more clarity and should be easier to police.

At last, big tech will be held accountable as the bill imposes a duty of care on social media platforms to protect users from harmful content, at the risk of a substantial fine brought by Ofcom, the communications industry regulator implementing the act.

It’s a step towards making the internet a safer, collaborative place for all users, rather than leaving it in its current ‘Wild West’ state, where many people are vulnerable to abuse, fraud, violence and in some cases even loss of life.

User verification

An initial issue I had with the earlier version of the bill, is that it positions algorithms which can spot and deal with abusive content as the main solution. This does not prevent the problem; it merely enables action to be taken after the event.

Arguably in recognition of this, the UK Government recently added the introduction of user verification on social media. It will enable people to choose only see content from users who have verified they are who they say they are – all of which are welcomed.

But the Government isn’t clear on what those accounts look like and its suggestions on how people can verify their identity are flawed. The likes of passports and sending a text to a smartphone simply aren’t fit for the digital age.

Account options

 In my view, there should be three account options for social media users.

• Anonymous accounts: available for those who need it e.g., whistle blowers, journalists or people under threat. There will still be a minority who use this for nefarious reasons, but this is a necessary price to pay to maintain anonymity for those who need it. The bad actors will receive the focus of AI to identify and remove content and hold the platforms to account.
• Verified account: Orthonymous (real name) – accounts that use a real name online (e.g., LinkedIn) and are linked to a verified person.
• Verified accounts: Pseudonymous – accounts that use an online name that does not necessarily identify the actual user to peers on the network (e.g., some Twitter), but are linked to verified accounts by the services of an independent third-party provider. Leaving identification in the hands of the social media platforms would only enable them to further exploit personal information for their own gain and not engender the security and trust a person needs to use such a service. The beauty of this approach is that it remains entirely voluntary and in the control of each individual to choose whether to verify themselves or continue to engage in the anonymous world we currently live in.

We expect that most users would choose to only interact with verified accounts if such a service was available and so the abuse and bile from anonymous, unverified accounts can be turned off. After all, who doesn’t want a nicer internet where there are no trolls or scammers?

Verifying users

In terms of verification, the solution is a simple one. Let’s look to digital identity systems which let people prove who they are without laborious and potentially unreliable manual identity checks.

Using data from the banks, which have already verified 98% of the UK adult population, social media firms can ensure their users are who they say they are, while users share only the data they want to, so protecting their privacy. This system can also protect underage people from age-restricted content.

Such digital identity systems already exist in countries such as Belgium, Norway and Sweden and have seen strong adoption and usage for a range of use cases. There is of course no suggestion that such a service will eradicate online abuse all on its own, but it would certainly be a big step in the right direction.

Buy-in required

With the introduction of the Online Safety Bill, the UK is now leading the charge on protecting people online and its approach is consistent to those being considered around the world.

However, the Government needs buy-in from social media firms, banks, businesses and consumers to win this fight. By working together and utilising the right tools and partners, we can all help protect people online, making the internet and social media platforms a safer place for all.

In e-commerce, everyone wants to sell more. You can do this in many ways: via social media, through user testimonials, by offering discounts and displaying how many items are left in your inventory. The list goes on.

by Attila Doğan, VP of Product Management, PPRO

The thing is, though, if you want people to click the buy button, they need to first check out. And the checkout is very important for conversion.

In fact, the likelihood of a conversion increases the farther along customers are in the buying journey. It goes to over 45% when customers get to the checkout page and tops 80% on the payment page. This means that if your checkout is good, customers will most likely buy.

So, let’s dive into some key tips on how to make your checkout more consumer-friendly to increase your conversion.

Keep it simple

The more trouble your customers have in navigating your website, the less likely they are to buy. This goes especially for checkouts. For example, the more fields and steps a checkout has, the less likely you are going to see a conversion.

So, make it simple and streamlined by reducing the number of fields or pages available. For fields, only ask for information that is absolutely necessary to complete the transaction. Want customers to sign in to buy? Then create a guest checkout to make things easier for those who do not want to register.

Similarly, if you are keen on having a multiple-page checkout, show your customers where they are in the checkout process. In other words, the design of your checkout should be straightforward, easy to navigate, and clear.

This clarity also goes for the language you use in your checkout. As well as using clear, everyday language, the language of your checkout page should be the same as the rest of your website. So, if your site is in German, then the checkout should be in German.

Be honest

By now, one key rule for checkout improvement should be obvious: make buying easy on your customers when it comes to your checkout’s setup and language.

Going a level deeper, this also means that you need to be honest. Pricing should be transparent at all times so there aren’t any surprises at checkout. 48% of shoppers abandon carts because of extra costs such as shipping, taxes, and higher fees than expected.

The solution? Let customers know of any estimated fees, early on. And offering free shipping is always a good idea.

Make it secure

Shoppers do not only want simple and honest checkouts that are easy to navigate. They want to feel safe when shopping online.

On the merchant side, estimates say online fraud can cost merchants over $12 billion per year. So, it is extremely important that your checkout is secure. Artificial intelligence can be used to put off fraudsters without getting in the way of discouraging real customers.

It also helps to make customers feel safer if you show a security designation, such as an SSL certificate, which means your website is authentic and connections to it are encrypted.

Diversify your devices

We live in an age where people shop on phones, tablets, and desktops. Worldwide, there are around 15 billion mobile devices, which include tablets and smartphones. From that mix, about 4 billion people across the globe own smartphones, and their shopping experiences have to run smoothly on all devices, including when it comes to checking out. This means ensuring your checkout works well on multiple devices and operating systems.

The right payment methods

This one may seem obvious, but you have to have the right payment methods in your checkout. The “right” payment options are the ones your customers use and want. Since the preferred methods change depending on where you are in the world, you need to know how people like to pay wherever you are selling.

In fact, 77% of online purchases in 2021 were made with local payment methods (LPMs). For example, popular LPMs in Belgium are Payconiq and Bancontact whereas if you are in Denmark, Dankort, Trustly, and Klarna are favoured options that belong to the payments mix.

The mix, or variety of payment options you offer, is important. No matter where you are selling, your customers like to pay in multiple different ways when checking out. So, if they see their preferred method at checkout, the more likely they will hit the buy button.

How to know you have nailed conversion

Ideally, you would do all of the above and sales would shoot up. But, as we all know, e-commerce is complex and things are rarely so simple.

This means that you should have a good handle on your checkout data, including where people are getting stuck. And you should also consider A/B testing to fine-tune your checkout process.

Considering all of the above, putting yourself in your customers’ shoes and making their online shopping experience as seamless and easy as possible will eventually lead to the increased conversion rates you’re seeking.

#1 INNOVATE
The world is changing faster than you think. Being distinctive and innovative is key to your survival and success. Create a top 10 list of innovation ideas you can implement across all functions of your business in 2020 and get it done. As Nike says, Just Do It!

#2 FOCUS, FOCUS, FOCUS
Focus is everything is life. Nothing can be achieved without focus. Pick the areas you want to go after and then put all your resources behind them. The real challenge will be – can you stay disciplined and avoid the distractions? Sometimes it is better to have the blinkers on!

#3 DRIVE ENTERPRISE VALUE
Customer is king, and your human capital is valuable, but what about the shareholder? Time to give them some tender loving care. Listed or unlisted – track your enterprise value monthly. More importantly, for every main strategic initiative, ask the question – how will it drive enterprise value?

#4 IT’S ALL ABOUT THE CASH
Cash still remains king. Sometimes it good to learn some lessons from the often criticized PE industry. Measure your business on cashflow. Run it like a shop. When your shutter goes down at night – how much cash did you bring in?

#5 DISCARD & ADD
Too many companies sink under the weight of too many products they like to sell. 20% of products generate 80% of revenue. The tail is always too long. Have the guts to discard products that don’t generate revenue and add selectively to drive your innovation agenda.

#6 ONLINE IS KING
Your channels are changing as you sleep. While your office and stores are shut, the customers are at play. Fastest finger first on their favorite online sites. Make being a best-seller on the #1 online channel your priority. Getting online right could make the difference on whether you live or die.

#7 THE NEED FOR SPEED
Patience is out of style. Customers want everything now. Clients wanted it yesterday. If you can’t take care of them, somebody else will. Online has made the world flat. Crash the turn-around-times of every key process in your organization. Go Formula 1!

#8 UNLOCK YOUR HUMAN CAPITAL
People are important, but not at the price of success. Structure right, have the right headcount and competency, but more importantly create a performance oriented organization. Reward the performers and clean up the tail every year in a humane way – yes, it is possible to do both together.

#9 GO COOLTECH, GO DIGITAL
The world has gone digital. Maybe this time the trees can really be saved. Automate to the maximum. Word’s like AI, Machine Learning, Robotic Process Automation are not Latin anymore. Simple applications using these technologies are available for all businesses. Use them. The robots have arrived!

#10 WORK & LIFE CAN BE BALANCED!
It’s true. Starts with your cell phone. Look at it every hour or two during the work day and once every evening at the most. Twice on the weekend. Sorry I can’t be more generous. And focus your free time on your family and friends – not Netflix. It is possible to work hard and play hard.

Have a great 2020, and see you on the other side of the calendar!

 

Regards

With the rise of Covid-19 in 2020, countries worldwide began to introduce national lockdowns in an effort to stop the spread of the virus. Across the globe, people found ways to cope with navigating the so-called “new normal.”

by Karen Nadasen, CEO, PayU South Africa

Africa, for example, has long believed that “cash is king,” but with more than half of the population having limited or no access to traditional banking, mobile money has proven to be life-changing. Thanks to alternative payment methods, many African families were still able to access essential services simply through a mobile device. Fintech firms have been critical in facilitating these transactions throughout.

In general, fintech development has been directly linked with financial inclusion, poverty alleviation, and enabling economic progress in Africa. However, as the payments industry develops, the goal is to strike a balance between new benefits and long-term economic value. The integration of finance and technology creates an ideal environment in which the continent’s market economy can improve its efficiency.

As fintechs continue to build on existing mobile and telecommunications infrastructure, it is clear that we are only at the cusp of Africa’s potential as the next payment and e-commerce hub.

The current state of FinTech in Africa

Last year, Europe saw record-breaking fintech investment in the Nordic region ($4.8 billion), Germany ($2.5 billion), and France ($2 billion). When compared against Africa, there is still room for growth, but it is evident that African entrepreneurs are gradually catching up with research finding that in 2021, African entrepreneurs raised more than $4 billion in VC funding, with fintech startups accounting for more than half of total capital.

The same research also found that the top four countries with the biggest population of software developers received 81% of venture capital funding globally (Kenya, South Africa, Egypt and Nigeria).

These countries, in particular, have been progressively making a name for themselves as fintech leaders within the African region. South Africa had been notable due to its well-established banking system, with its top four banks providing 80% of banking services in the country. Kenya, on the other hand, continues to make significant strides as a result of M-Pesa, the mobile-based fintech. In fact, M-Pesa provides more than 51 million customers across seven countries in Africa with a secure and affordable way to send and receive money, top-up airtime, make bill payments, receive salaries and even receive short-term loans.

In Egypt, new government laws are making it easier to apply for banking licences. Because of this, the country has risen to prominence as a key supplier of fintech firms in the last year. That said, Nigeria remains the largest investment in developing fintech startups. Paystack and OPay are among Nigeria’s most well-known fintech unicorns, valued at more than $1 billion.

Additionally, while research shows that 45% of the population relies on a formal bank account, 81% have reported owning a mobile phone. Increasing mobile access is creating opportunities for fintech intervention to enable financial inclusion in the region.

Why access to mobile devices is key

According to World Mobile’s research, Africa’s internet economy will more than double in value over the next three years, from $115 billion today. Furthermore, 71% of investors expect mobile phone affordability in Africa to improve over the next three years, according to the same study.

14 years after the launch of M-Pesa in Kenya, there are now nearly 200 million consumers subscribed to mobile money services in Africa. In fact, mobile payments across the continent saw large growth even prior to the pandemic. Africa was actually responsible for two-thirds of total global mobile money transactions recorded in 2018 alone.

That said, there is still much to be done to enable fair access to mobile devices, such as data costs. Kenya and South Africa for example, have the most advanced mobile infrastructure and high internet traffic in the continent, yet it falls far behind the worldwide mobile data pricing list in 2021, with charges of $2.25 and $2.67 per gigabyte of data respectively. This, in comparison to the $0.27 charge in Sudan for example, is a significant barrier to further mobile adoption.

Countries like South Africa will see more widespread adoption of mobile payments once it becomes more accessible to all consumers. In September 2021, the number of banknotes and coins in circulation in South Africa represented 2.7% of the country’s R6.1 trillion GDP, reflecting the high demand for cash in South Africa. To ensure a noticeable shift to digital services across the entire continent, fintech innovation needs to consider accessibility and affordability.

Despite this, mobile payments continue to lead Africa’s fintech revolution and two things remain clear: the migration to digital payments is here to stay, and the acceleration of fintech-led solutions will continue to see support by governments and regulators due to its potential to promote economic growth.

Investing in Africa to drive financial inclusion in emerging markets

Financial services for cross-border trade, peer-to-peer remittances, personal money management, and more, will become more accessible and commonplace across Africa as technology advances and mobile payment capabilities improve. This, in turn, will create further opportunities for both merchants and consumers to build on the region’s economic growth.

There is still significant progress to be made, however, in shifting the preference for cash and ensuring affordable mobile data. Once this is addressed across the entire continent, mobile payments will see a steep increase in adoption, particularly due to the increased recognition of its socio-economic benefits. 2022 will see more partnerships occur between financial institutions, governments and mobile payments providers. This will ultimately create more choice, opportunity and day-to-day improvements for the millions of people across the globe’s largest continent.

The decentralised nature of blockchain has underpinned its success from the earliest days of Bitcoin. The launch of Ether, the second-largest cryptocurrency by market capitalisation, introduced a new type of blockchain called Ethereum designed to do much more than send minted coins from A to B. Ethereum ushered in a new era for blockchain with the smart contract, a game changing feature that has since been used to make a whole plethora of DeFi applications and is rewriting the rule book on how we think about the role of centralised finance.

by Chris Aruliah, Chief Product Officer, BCB Group

Smart contracts are the driving force behind DeFi and have enabled a torrent of innovation on blockchain protocols attracting a rapidly growing user base. Anyone can deploy a smart contract onto a public blockchain which can be developed in a way that ensures the code is unchangeable and automatically runs whenever pre-programmed conditions are met by users. The unchangeable nature of such smart contracts removes the need for an overseer to check that an agreement is being carried out as intended. This trustless peer-to-peer environment is creating incredible efficiency and scale with the total value locked in smart contracts over $200 billion, up from $1 billion in 2020. As a result concepts like Web3 have become part of our lexicon with higher levels of liquidity flowing into smart contracts run on DeFi platforms.

DeFi exchanges like Uniswap and Pancakeswap don’t use fiat currency, which maintains a level of autonomy from traditional finance. Investors who want to profit from financial products unique to DeFi need to use centralised exchanges like Coinbase or Kraken to use their fiat to buy Ether or tokens compatible with DeFi platforms.

These newly acquired assets then need to be transferred to a wallet like MetaMask which makes it possible to connect with and use a decentralised exchange. To convert these assets back to fiat this process is done in reverse with funds returning to a CeFi system connected to fiat payment rails and banks. This highlights how reliant DeFi is on a reliable integration with traditional finance that requires compliant on and off KYC ramps. While this centralised and decentralised alliance is the start of opening up DeFi markets to institutional investors there are considerations such as counterparty risk that need to be taken into account.

A primary incentive for investors to lock their funds into DeFi smart contracts is the profit being made on yield farming and lending protocols generating returns with interest rates far exceeding opportunities on offer in traditional finance. The increased liquidity on these platforms has created a huge demand for borrowing with smart contracts automating the entire process. Unlike CeFi exchanges, DeFi exchange transactions are public with a high degree of transparency though users are pseudonymous, only represented by a series of numbers (wallet address), and while they have used KYC ramps on centralised exchanges to buy crypto assets needed to invest on DeFi platforms, institutions may also need to prove who they are lending to.

Providing a robust guarantee that all those participating in a DeFi liquidity pool have met stringent KYC and AML standards would provide institutional investors with the confidence to capitalise in this space. The most ardent supporters of decentralisation may argue that further centralised control would be a step backwards and that the reason for the success of DeFi has been because of the firm resistance to centralisation. The current hybrid approach of CeFi bridging the gap to DeFi from fiat to crypto liquidity pools will see further iterations to accommodate a wider market with both decentralisation purists and traditional finance players able to find DeFi platforms that leverage the latest smart contracts to best suit their individual needs.

Going digital has become the norm and is no longer the exception. Even the smallest SMEs require digitalisation at a fast pace.

by Ronan Gallagher, Head of Omnichannel, Trust Payments

One of the most important steps in this journey of transformation is digitising payments. Although the last hurdle to cross in most customer experiences, payments and transactions are crucial steps. This will dictate whether the customer makes the final decision to pay for your service or product and essentially decides whether your business makes a profit or not.

The SME landscape is cluttered with competition and even a small differentiator can make a huge impact. Today’s world is characterised by faster, smarter and more efficient functions. The pandemic has accelerated the need for more digital efficiency and solutions. Gone are the days when cash was considered easy and effective.

Payment quality over quantity

However, with tight constraints around investment, SMEs need to keep in mind that they don’t have to provide every payment option to their customers. The right mix of choices that suits their business needs and customer preferences is the best practice.

Apart from the benefit to customers in providing an overall smooth and consistent experience, a unified payment system also helps a business understand its sales and inventory, as well as reducing management time.

An omnichannel payment process also serves as a point of data collection, helping SMEs better understand their customers, and their journeys as well as recognise pain points. Consumers today have a multitude of choices across every industry and every purchase decision. An enriched pool of insights will help to deliver a unique and seamless customer payment experience.

The omnichannel experience

Omnichannel payment methods that offer customers multiple payment options at checkout are changing the way businesses interact with customers and vice versa. They are providing a far smoother payment experience while also reducing the amount of time, resources and effort required to sustain a traditional payment journey.

A process that accepts multiple payment options has a range of benefits. An integrated option that drives a smooth, secure and consistent experience can increase sales as well as improve retention of customers.

Omnichannel payment processing requires the integration of not just online but also offline payment processes. Whether a customer decides to make a purchase online or offline, they should be able to choose the right payment method without having to experience any hindrance.

Loyalty is king

Customers have become far more demanding and they are looking for convenience. They want to make payments whenever and however they choose.

In order to provide these options, SMEs need to know their customer pain points. Recognising what works best for your customers is imperative to running a successful business.

SMEs are constantly looking for ways to improve their services and come out on top in a very competitive market. Having the right technology in place gives SMEs a bird’s-eye view of their customers and how they interact with the business.

Real-time data, real-time benefits

One of the most notable benefits of a seamless and integrated payment system is that it allows for real-time data synchronisation. This helps SMEs track and update changes between systems as they happen.

Another advantage is that real-time synchronisation allows for data consistency over time, making it a continuous process that can provide insightful information for the business to grow. Customers choose options that they are familiar with and most convenient to them. Data allows your business to understand what these options might look like.

Whether it is building better offerings, integrating more cutting-edge tech or offering discounts and coupons based on customer patterns- data enables it all.

Customer-orientated incentives

This real-time characteristic of data can prove significant in building customer loyalty. Through this analysis and understanding, SMEs can build out customer-oriented incentives to drive loyalty and retain customers.

By ensuring data insights are implemented, businesses can provide a frictionless experience across all channels both in-store and online. This will also enable customers to make repeat purchases, spend more and even recommend others to your business.

Data will not only help SMEs offer the best and most secure payment options but whether incentives like basket abandoned reminder features, personalised discount add-ons and optimised checkouts are needed to get customers over the line.

A new type of commerce

The main aim of any commercial tech used by SMEs is to make functions easier and more efficient. At the same time, the tech used has to be adaptable and suit growing businesses. SMEs are prone to constant change and so the tech they use needs to be future-proof.

An emerging commerce concept at play here is Converged Commerce™. Born out of the idea that streamlined and cohesive solutions will improve customer journeys and how business will run in the future, connecting multichannel data gives SMEs rich insight to deliver memorable, personalised and consistent customer experiences.

If businesses put Converged Commerce into practice, they will forge and maintain deep and meaningful relationships, drive loyalty and increased sales.

The future of payments for SMEs

When SMEs think about their dream customer experiences, they think seamless; integrated. Customers do not want clunky and confusing journeys and are bound to shift to other offerings the second they feel uncomfortable. The right tech can help smooth over already existing infrastructure and at the same time support businesses as it expands and changes over time.

As the market gets more and more consumer-driven, hyper-personalised experiences are leading the way to build satisfying customer journeys. Only those businesses that can provide quality customer experience across all touchpoints are able to remain competitive.

While a seemingly large and daunting task with significant cost and resources, building a streamlined omnichannel payment experience is a lot simpler when harnessing the modern technology available at our fingertips. Payments are in an exciting place right now and taking a step in the right direction will be a gamechanger for SMEs looking to disrupt the landscape.

When people talk about mutualisation, minds often jump straight to ideas around cost savings and operational efficiencies, and of course these are core benefits – managed services providers can leverage economies of scale for their clients. This transformation model has become much more enticing for financial services firms operating in today’s landscape of complex and constantly evolving regulation.

by Samir Pandiri, President of Broadridge International

However, the concept of mutualisation has evolved and is no longer simply a case of lifting out the non-differentiating operations of a business. Instead, more firms are realising that mutualisation also means shared access to cutting edge next-generation technologies, including AI, blockchain, the Cloud and digital. Each of these technologies is helping to drive much-needed digital transformation across the financial services industry, and many firms are starting to see the fruits of the innovation they can bring.

In Broadridge’s 2022 Digital Transformation and Next-gen Technology Survey, we asked 750 C-suite executives and their direct reports globally on the sell side and buy side about their firm’s digital transformation. The survey explores the financial, operational and strategic benefits of digital transformation, and charts the digital maturity of firms of different regions, sizes and sectors using Broadridge’s Digital Maturity Framework.

Here are some of our key findings:

APAC is leading the way

Broadridge’s report found that Asia Pacific has a higher percentage of firms categorised as digital transformation Leaders (23%). Reasons for this could include access to digital talent, and less stringent regulations than other regions, particularly around the use of data.

However, a shift may be coming. The report found that a higher percentage of firms in North America (57%) are accelerating the pace of change of their digital transformation and next-gen technology strategy, in comparison to APAC (44%) and EMEA (38%).

Variations in digital maturity by sector

The report also highlights emerging gaps across different financial services industry sectors when it comes to digital transformation. Scoring highest in Broadridge’s Digital Maturity Framework are asset managers, who were found to have the highest percentage of Leaders and the lowest percentage of Beginners.

Universal banks and full-service financial institutions came in at a close second – with two fifths of those surveyed achieving Leader status (40%). There was a strong correlation between firm size and digital maturity, and as full-service firms tend to be larger, it is not surprising that they scored more highly for digital maturity. This could be down to economies of scale and bigger firms having a larger revenue base to spread the cost of innovation across. Regardless of the causes, this finding suggests that smaller and mid-sized firms need a clear strategy in place to keep up with the pace of change set by the Leaders.

Some sectors, such as insurance, were found to be very evenly spread across the different maturity levels. However, at the other end of the spectrum, there were very few digital Leaders among the wealth management firms surveyed (13%), and interestingly the majority of retail banks were found to be digital transformation Beginners (54%).

Improving customer interaction is the top priority

While firms of different sizes, sectors and regions may all be at different stages of digital transformation, it was interesting to learn that the key drivers for adopting next-generation technologies are the same. Nearly three quarters of those surveyed (74%) cited enhancing customer interaction as a priority area for digital transformation, followed by improved operations (64%) and sales and marketing (62%).

When it comes to crafting effective digital communications for clients, both Leaders and Non-leaders said that personalising the experience matters most when it comes to the communications that they send. Most Leaders were found to be in the later stages of offering micro-personalised communications, with 38% at an advanced stage and 53% at a mid-level of implementation.

The pandemic played a role in this acceleration, with customers relying more on the digital communications they receive rather than face-face interactions. Technologies such as AI, predictive analytics and machine learning are also increasingly able to facilitate the hyper-personalised solutions that clients are looking for.

Uncovering the true value of digital transformation

For Non-leaders, there can be a number of obstacles when it comes to accelerating their digital transformation strategy. One example is data management and analysis. Many firms are still grappling with creating centralised data models with access to data across siloes. As a result, more and more firms are turning to external providers to gain access to specialised expertise, resources and data visualisation tools (48%).

Other key challenges firms face include access to digital talent, modernising legacy IT infrastructure and lack of an effective roadmap for innovation. However, firms with insufficient resources for an internal innovation function do not need to be left behind. Instead, they can leverage the benefits of a wider ecosystem through the support of FinTech providers.

This approach offers a reliable source of innovative solutions, expertise, data and platforms built on next-generation technologies. In fact, we find that even firms with mature internal innovation functions frequently benefit from external thinking, and new products and platforms that FinTechs can provide.

In conclusion, while there are many challenges to becoming a digital transformation leader, we know it is well worth the investment. Broadridge’s report found that Leaders are 1.5 times more likely to report increased revenues from digital transformation. This is because it drives significant performance improvements across the entire front- to back-office lifecycle, including better fraud detection, enhanced customer experience, streamlined operations, and improved trade and investment analysis. All these improvements will lead to greater customer loyalty, and so it is vital that all firms evaluate their current digital transformation roadmap, and ensure it is fit for purpose to achieve the results they are aiming for in 2022 and beyond.

API (Application Programming Interface) traditionally pertains to the tech interface between software programs. This interfacing ability facilitates a third-party application, to synchronise and connect to a bank’s tools and services.

by S Anand, CEO, PaySprint 

API banking refers to a set of protocols that makes a bank’s services available to other third-party companies via APIs. This helps both banks and third-party companies augment their complementary specialities and offerings more than they can provide to their customers by themselves.

What is Unified open API ?

Interconnection is the essence of this era of information technology. Behind every single interaction in the Internet, the APIs operate as worker bees to ensure that data gets exchanged in an agreeable format between the servers and the users. As organizations opened up and started adopting the internet everywhere, creating a solid integration strategy by choosing the right API became mandatory.

Today, rampant digitization and deep penetration of social networking across industries have pushed several key service providers to devise APIs on their own. So, enterprises are caught between investing in evolving APIs to manage technological disruptions and ensuring that they have operational expenses under control.

Unified API- All under one roof

To address the exponentially increasing complexity of bridging a diverse spectrum of systems and to enable businesses to gain a competitive edge in the market by letting them access every tool of their choice simultaneously, the concept of Unified API was discovered.

Unified API is a customizable layer over the middleware that acts as a point of integration for all the data sources, APIs and services across the market. This mid-level interface enables an enterprise to view the rest of its resources via one giant peephole thereby decreasing operational complexities and empowering them to avail of the best of services within drastically reduced integration expenses.

Unified API for Modernized Digital Architecture

Increased competition, improved tools and integrated methodologies have made DevOps the holy grail of modern project development plans. Continuous Integration, one of the important aspects of the successful adaption of a DevOps lifestyle, mandates the projects to have a shorter turnaround time between code fixes and a version release.

Banks continue to be the custodian of the customers and the various products and services whereas fintechs create Open Unified API’s platform which can lead to larger adoption of banking services and thereby cause larger customer adoption, interface and Delight.

Unified API improvises architecture digitisation for Banking solutions as follows.

• Reducing Time to Market: Unified API allows the project teams to have a greater reflex for technological disruptions as the layer allows easier addition and deletion of APIs. Unified API thus serves as an effective pit stop that accelerates the integration of various banks at the same time and enables faster product releases into the market.

• Ensuring uniformity: Unified APIs bring programs of different styles under one roof by tying them together with a common base. This uniformity promotes code sharing, reduces the compatibility complexities and ensures a uniform layer of security amongst various banks and partners irrespective of the protocols and programs.

• Improving Data Analytics: Unified APIs are designed to allow and process data from and to customer touchpoints into the systems through a single medium irrespective of the Bank. For retailers and enterprises that thrive on user data, this easier collaboration of data streams would ensure better analytics and improved personalization for their users.

• Improving Scalability: The very concept of Unified Banking API promotes greater flexibility to scale as per the needs of the enterprise. This also allows businesses to innovate on the go without having to worry about the increase in integration or maintenance costs. The layer also creates more room for rapid 3^rd party integration to customize and accommodate the growing demands in the market.

The other factors which have a major impact on how Bharat Transacts and is the core are JAM

J – Jan Dhan account – Today 90% of the eligible Indians have a Bank Account

A – Aadhar – More than a Billion Indians have Aadhar cards

M – Mobile or smartphone penetration is close to 450 million and expected to be 800+ million in the next two years

The above three along with good data connectivity have only empowered the greater importance and need for a Unified Open API.

Unified Open API has come as a boon to entrepreneurs, start-up companies, MSMEs, and enterprises by reducing time to market, ensuring uniformity, improved data analytics & improved scalability. They have been able to innovate and create sachet financial products, especially for customers in Bharat. They can spend more time innovating a product and working on GTM (go to Market) plan rather than worrying about the backend connectivity which the Unified Open API offers seamlessly.

The JAM, better data connectivity and Unified Open API is changing how Bharat transacts and these are proved by growing numbers of Digital Banking. By 2025, it’s estimated the volume and value of digital transactions in India will reach 167 billion and INR 238 trillion respectively and here Bharat will drive this growth.