IBSi Blogs

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.

As more Covid restrictions lift around the world, there has been an inevitable fresh frenzy of opinions shared over the role the office will play in the future working world. But for wealth managers, another more pressing hybrid working scenario is front of mind: to what extent will client relationships return to direct and in-person interactions, and how do client preferences on this pressing issue differ across the wealth continuum?

by Mark Trousdale, Chief Marketing Officer, InvestCloud

In this business of relationships, the white-glove service traditionally demanded by high-net-worth individuals (HNWIs) might seem like a harbinger of a return to the more traditional routine of face-to-face meetings and phone calls. But don’t be so sure.

After two years of tumultuous change, the expectations and preferences of how the world’s most affluent want to engage with their wealth managers and financial advisors have shifted dramatically – and had been doing so for some time before. Already many HNWIs used online banking and enjoyed the convenience of digital tools in other areas of their lives, across the age spectrum. And the shift to digital accelerated by the pandemic seems only set to increase amid the mind-boggling $68 trillion baby boomers are expected to pass on to younger, more tech-savvy generations. Add to this a greater emphasis on transparency and a desire to play a more active role in their investments – including to invest differently as the ESG movement takes off – and it’s clear HNWIs today want a much more personalized and intuitive digital experience from their wealth manager.

So how can wealth managers and advisors translate the same high-touch offline experience into the digital arena, and what advantages can this bring to their business?

Remodelling the digital experience for HNWIs

The conflation of the broad possibilities of digital advice with the more narrow purview of Robo advice has led some to discount digital for certain segments of the industry. Some try to discount the importance of digital because it is often thought of as only catering to the mass market – for example, pointing out that simple onboarding questionnaires create a one-size-fits-all approach that can never meet the sophisticated needs of HNWIs. But this misses the broader capabilities of digital.

We need a new model for how clients can interact with their wealth digitally – one attuned to their unique needs and preferences. This is critical whether you look at excellence in client communications or planning. And indeed it’s as much about flexibility in the experience and understandability (intuitiveness) as it is about reflecting that you understand and share the feelings of your clients, digitally. This is what is called ‘digital empathy’. The future of wealth management relies on this, particularly because it is true for all levels of wealth and especially so for HNWIs.

To achieve digital empathy for excellence in communication and planning, wealth managers need to recognize and deliver digital solutions to suit a range of unique digital client personas that go far beyond traditional wealth segmentation by age, gender, wealth and the like. They should incorporate characteristics such as financial interests, ESG values, digital savviness, approach to digesting information and appetite to set life goals. This means portfolios and products – and equally digital experiences – are fit around the client and not the other way around.

For instance, many HNWIs are increasingly demonstrating the desire to be increasingly involved in their investments. With deep knowledge and interest in financial markets, they want to play a more hands-on role in their investments – and align them to their values. They may want to sign off on all investment decisions or have a portion of funds to tinker with themselves. Educational tools rather than overly managed or advised solutions will speak best to them, helping them build investment models or recommend different products to try. But chat, video calls and other digital communication channels to their financial advisor should remain open when needed. The key is that they call the shots.

Other HNWIs – though increasingly fewer – may want a more traditional approach. These might still like to receive PDF reports – which can certainly be done more efficiently digitally using publication to a client portal. They may check their investments online but need the reassurance of speaking to their advisor in person or on the phone before making decisions.

It’s about picking the right model for the right client. Equally, it’s not about supplanting human advice outright but supplementing and enhancing it with what’s possible in digital.

End-to-end financial planning

Everybody needs a financial plan. That’s true no matter your level of wealth or life stage – whether that’s saving for a house, your child’s education, buying a second home or managing cash flow. But the fact is that HNWIs have more nuanced financial complexities to contend with – from tax, real estate and cash flow management to business succession planning – that require the specialist know-how of a financial planner armed with the right digital tools for maximum operational efficiency.

The problem is this service to date has been very fragmented. A financial planner would produce a comprehensive and lengthy plan and may recommend a private bank to help implement it, but the burden ultimately fell back on the HNWI (hardly a white-glove service). But in a digital environment, this process can be much more joined-up; an advisor can build a bespoke plan and, in the same stroke, recommend complementary products and solutions to help clients achieve their financial goals. All while communicating effectively about the plan. This is much more seamless, convenient and understandable for end clients.

Increasing client engagement at scale

HNWIs are often considered wealth managers’ most prized and sought-after clients, but increasingly they are not the most lucrative. According to Capgemini, while HNWI wealth is up over 70% since 2008, profitability has decreased for wealth management firms. They may bring in vast sums of wealth to manage, but servicing this is often very labour intensive and squeezes margins. And this means all the best client engagement in the world could still fail to support the business.

Identifying high-friction automatable workflows is the first step to achieving high-quality service at scale – processes like prospecting, onboarding and cashflow forecasting. The second piece of the puzzle is to partner well to benefit from intelligent digital tools to enhance operational efficiency. It’s a decreasing but still fairly commonly held false belief that advisors need to be the best at building technology. Whereas the truth is they need to be the best at advice and wealth management and partner well.

A great example of automation is the operational efficiency that AI-driven Next Best Action recommendations can bring to the industry. Machine learning trained on client data can provide key insights into how clients interact with their wealth online. Marry that with automated research analysis using natural language processing and AI, and advisors can quickly start to generate custom recommendations for products and actions in a client portfolio that are as personalized as clients really expect top-notch wealth managers to be these days. This means that advisors can intervene and engage with clients efficiently by knowing exactly when and how to give the best advice.

We are still just on the cusp of seeing how digital tools like these can help propel the wealth industry forward. Wealth managers should embrace this and not harbour any preconceived notions that their HNWI clients are eager to return to the old ways of interacting. It is about planning, communicating, and implementing the right hybrid mix of advice that best fits the client while always looking for opportunities to harness the greater degrees of personalization now possible in digital. That is the level of service clients expect. And luckily, it doesn’t have to come at the cost of scale.

The acceleration in digital transformation and digital adoption across all industries has raised customer expectations over the last few years. The way customers want to pay for or access services has changed for good, so insurers, just like all those in financial services, have to meet those expectations to stay competitive.

by James Turnbull, Chief Digital Officer at Reassured 

Consumers were already getting used to a smarter, more personalised service thanks to the rise in technology, but the pandemic, with its need for arm’s length interactions, fast-tracked the need for service providers to offer that service.

It’s apparent that greater adoption of fintech and innovation in the insurance industry is needed, both to keep up with changing customer expectations and ensure that the customer always remains the first priority.

How does the insurance sector measure up?

There are plenty of industries where embracing and benefitting from fintech is the norm, but arguably insurance is not yet one of them, having lagged behind its counterparts when it comes to embracing new technologies and adapting to changing customer needs. This includes the way in which we can now buy most products and interact with service providers so quickly and seamlessly online.

The stereotypical view of insurance may well be that of a traditional, paper-heavy industry that’s not known to keep pace with technology, but that doesn’t have to be the case. Figures from PWC demonstrate that almost half of the industry globally claims to have fintech as an integral part of corporate strategy. However, only 28% of industry players look at partnering with fintech organisations, and only around 14% actually participate in fintech ventures or incubator programmes.

But with many insurers beginning to introduce online platforms offering a “buy now” option for their products, it is clear that a shift is beginning to take place. Insurance brokers need technology to maintain their competitive edge, and if they don’t embrace fintech to better meet customer needs, they will lose out to those that do. Moreover, the rise of challenger banks has also put increasing pressure on traditional institutions in the financial services sector, who now need to strategise how they can compete and retain their market share.

Using FinTech to meet customer needs

The goal of insurers is to broaden the pool of people that have access to protection, and fintech is the only way to achieve that in today’s digital world. The way the industry sells insurance should be the result of how the customer wants to access these products, not the other way around.

Some customers are looking for advice to make sure they get the best product, and there is tech out there that can ensure they get directed to this channel, should it be best for them. Other customers just want a simple out-of-the-box policy that they can buy quickly and easily, with at least some elements of self-service.

Technology can help, giving customers, access to a tailored comparison of life insurance products based on their answers to a single set of underwriting questions, and then offering an efficient and straightforward “buy now” capability.

Giving customers the choice that best suits them offers the flexibility that consumers need and gives insurers a real opportunity to increase revenue and even diversify further still.

And that’s just the start. Creating an omnichannel approach using fintech is key to responding to changing customer needs and ensuring these needs are put first. Digital technology makes life easier for consumers, and they often have their own preferred method of dealing with service providers. Access to a basic website is no longer enough, people expect live online help, mobile apps, and more. Moreover, the adoption of fintech at policy level can enable insurers to use app technology to collect data (for example, vehicle or health insurance).

What’s next for fintech and the insurance industry?

The most successful insurers will be those that offer the fastest, most efficient customer journey all the way from the initial quote to full cover. If customers are able to choose and buy their insurance online, they don’t want it to take upwards of 60 clicks to get to the final, fully underwritten decision.

Insurers will need to offer a full omnichannel approach to meet customer demand for a connected experience across multiple channels. Consumers are used to being able to choose their preferred method, or methods, of interaction with retailers and service providers. They’re also used to being able to switch channels and continue the conversation or process seamlessly, without having to start again from the beginning.

There is still a long way to go, but there’s no doubt that the role of fintech in the insurance sector will continue to grow. Fostering a truly omnichannel approach to the way consumers buy insurance provides a vital way forward for the industry, and, ultimately, it will ensure more people are better protected.

The FinTech industry is constantly evolving, making it a rather exciting sector to be in. New solutions are continuously being developed to transform the way we bank and pay for goods and services both domestically and internationally. However, just like the rest of the technology industry, for many decades, this sector has been dominated by men. Luckily, this is changing.

by Terry Monteith, SVP Acquiring & Payments at BlueSnap

I have witnessed the shift throughout my career. I started my professional journey at a large financial institution. By the time I joined BlueSnap in 2013, I noticed a big difference, in not only the number of women entering the industry in more junior roles but in the number of women who were taking on senior leadership roles with decision-making responsibilities. This has only grown since then, and I have noticed this trend towards equality in many other tech/fintech organisations.

Having said that, there are still some barriers to women entering the industry. It is important that we unpack these hurdles and spotlight the solutions so we can drive more inclusivity within the industry.

The barriers for women in fintech/tech

There is a need to educate people about the various paths into tech. There is a misconception that you need a coding background in order to enter the industry, which isn’t true at all. The people I work with come from various disciplines. Hence, there is more we can do to show people the range of roles available in the industry.

And for those that want to learn to code, there are so many online platforms that aren’t expensive (some are free) that will allow them to develop this skillset from the comforts of their own home. We are happy to see some universities adding Fintech tracks to their curriculums.

A lack of work flexibility can also act as a deterrent for women either entering the industry or climbing to those senior positions. When putting together work policies, it is important that companies consider the work-life balance that people now demand – such as remote workdays and flexible work hours. This will help foster a more inclusive workplace.

How to encourage more women into tech

The key to attracting more women into the industry is by creating a healthy work environment that people regardless of gender want to be a part of and stay in. Having a senior management team with multiple women makes women in all positions more open to your organisation. When the culture is right, it makes it easier to just focus on hiring the right talent.

One of the first things people do when looking for a job or preparing for an interview is to go on platforms like LinkedIn, to understand who the key stakeholders are. Therefore, when they see diversity throughout the company, especially at the top, they will feel more welcome. It’s one of those things where, if you can see it, then you can be it.

At BlueSnap for example, we have created a culture where women feel welcome and are able to rise to very senior positions. Our senior executive team is very balanced between the number of men and women. A third of BlueSnap’s senior executive team are women and it’s worth noting that there are a number of women in senior-level positions, including coding and developing.

Key considerations for women entering FinTech

There is so much to learn about fintech. I would encourage people to think globally. For example, if you are based in the US, where payments are quite a card centric, it is imperative that you know what’s happening in other countries. And learn about those emerging payment trends. Understanding the big picture will place you in a better position to get ahead. The more you know, the more positioned you are to help.

Additionally, payments are a detailed oriented business. You have to get into the weeds of things. So, learn about the little frames that help tell the big picture, and understand the importance of keeping things simple.

Throughout my career, I have strived to be part of what’s next in finance, banking, and payments. I’m inquisitive by nature, so thinking about where the industry is headed has always helped me navigate my career and be a part of the continuous evolution of the sector.

Across the globe, the pandemic massively accelerated the shift towards digitalisation across all sectors. Banks are no exception. The migration of banks’ IT systems onto cloud-native platforms promises to rapidly transform customer experience delivery, business continuity, operational efficiencies and resilience.

by Jerry Mulle, UK Managing Director, Ohpen

However, at what point do the benefits outweigh the status quo – and what are the motivations behind this pivotal transition in the industry? Legacy banking IT systems are increasingly unattractive to financial institutions in the modern world, compared with benefits offered by cloud-native banking, and are making digitalisation more appealing to them. Institutions are looking to evolve and modernise their services to deliver greater customer experiences. What’s more, implementing these new cloud systems can now be done faster, in a modular way and with minimal disruption.

Cut costs, save energy

Some financial institutions are still working with outdated legacy systems, relying on slow, bulky on-site local servers – and even excel datasheets in some cases – to run their processes. These institutions are now realising that they are losing out in doing so. The cost of maintaining such systems or enhancing them to meet new regulations can be immense. Decommissioning old IT systems and switching to a cloud-native platform can enable significant cost reductions – some of our clients, for example, have experienced cost reductions of up to 40% by doing so. Data, server storage and performance power suddenly become on-demand which enables the ability to scale up and down as needed.

Running legacy systems also has another long-term disadvantage: a larger carbon footprint. The pressure on financial institutions to move towards more sustainable models hasn’t increased from society and protests alone, but also from their own internal stakeholders. What’s more, with Europe’s top 25 banks still failing to meet their sustainability pledges, according to research by ShareAction, it’s clearly more important than ever for financial institutions to take tangible steps to reduce their environmental impact. Cloud-native banking can play a key role in achieving this.

Institutions can reduce the carbon emissions emitted by their systems by 80% when they switch to cloud-based IT alternatives, according to AWS, moving them further towards meeting their net-zero targets. What’s more, basing systems on the cloud replaces the use of heavily airconditioned server rooms for more efficient software applications and direct integrations with third parties, reducing unnecessary waste.

Unlocking agility and driving innovation

The reasons behind large financial institutions’ incumbency often comes down to the legacy systems they have in place. Sometimes dating back to the early 1990s, these bulky systems greatly reduce banks’ flexibility and capacity for innovation. Deeply ingrained into their overall strategy and ways of working, institutions often fear potential technical issues caused by replacing such systems with cloud alternatives. However, the transformation process is becoming increasingly less disruptive to everyday operations – delivering almost 100% system uptime.

Cloud systems also open doors to significantly more flexibility when it comes to creating new products and offerings. Cloud-native systems are based on an API first strategy allowing institutions to curate their own partner ecosystem as well as inherit best of breed integrations as part of the solution. As a result, banks are empowered with endless levers and combinations to create new propositions.

In addition to this, banking on cloud-native platforms is more accommodative to emerging AI capabilities, which empower banks to increase the efficiency and tailoring of the services they offer to their customers. For example, in areas such as mortgages and loans. Documents such as IDs and payslips, which are considered unstructured data, can be interpreted using AI, while connections into other data outlets like credit rating agencies can enrich application information. This ability to organise unstructured data means that we are nearing the times of one-click mortgages, improving the customer experience like never before.

Cloud-native systems therefore form an appealing prospect for large incumbents: not only do they provide a disruption-free entry point to use more efficient technology, but also offer an enhanced ability to adapt to the unpredictable ways in which financial technology will evolve. Cloud technologies will allow institutions to cement their place in the market by empowering them to tackle unknown challenges in the future – challenges that legacy systems will struggle to solve quickly – while simultaneously putting the customer’s needs first.

A future in the clouds

The solutions that cloud banking offers have both potential and clout, enabling banks to cut costs and empowering them to reduce their energy consumption, deploy AI in more efficient ways and prepare for future technologies. For customers, this means that innovative developments in financial services are becoming more directly available for their use. Customers will benefit from instant services, such as loans and mortgages that are automatically tailored to their personal requirements, all powered by AI. As a result, these elements compelling banks to move towards cloud-native systems, and captivating their customers, are set to keep unleashing innovation across the wider financial services landscape at speed.

Over the last decade, FinTech has transformed UK banking. This was most prominently seen in the rise of challenger banks like Revolut and Starling and remittance companies like Wise. Unencumbered by the need for branches and sensing chronic disillusionment with traditional banking, the newcomers created systems and products that customers wanted, often at better prices than traditional banks could offer.

by Philipp Buschmann, Co-Founder and CEO of AAZZUR

This sent those banks scrambling to frantically bring their products into the 21st century. All so they could offer a customer experience that matched that of the challengers.  This genuine focus on customer experience is FinTech’s most visible legacy. Thanks to the positive customer relationships companies fostered, incumbent banks now face an expectant customer base who are willing to move to get what they want.

That’s just the tip of the transformation. FinTech has reimagined what it means to even be a bank through Banking-as-a-Service (BaaS). This, combined with the data opportunities afforded by Open Banking, is FinTech’s real legacy and where the sector’s new players still lead most incumbent banks.

Traditionally a bank controls every aspect of its services. BaaS allows FinTechs to integrate their systems with each other to expand their own offerings or profit from others integrating theirs. Take Starling for example. It benefits hugely from opening its payment rails to companies like SumUp and MasterCard while simultaneously offering its own customers the services of FinTechs like Wealthify and PensionBee.

Traditional players in UK banking are already getting in on the action. Lloyds is working with Thought Machine, RBS with 11:FS. By integrating with some of the most innovative companies in the world they are able to vastly expand and improve their own offerings with relative ease. The most exciting bit is it’s not just banks doing this. Any retail business can now offer a vast ecosystem of financial products.

What, though, does this mean for investment in the sector? The end of the last decade saw billions of VC and private equity dollars annually pumped into FinTech. But the planet is a volatile place right now. It is this, more than anything else, that will dictate the direction of investment.

In times of crisis, investors seek safety, so expect a shift towards sure bets. In UK banking, this already seems to be the case. The biggest benefactors will be the largest FinTechs. Companies like Revolut, Starling and Wise are now, just like the very banks they were created to challenge, simply too big to fail.

Another big factor will be where traditional banks invest. As they continue to mirror the challengers, innovation seems most likely. Either internally or by partnering with smaller, agile firms like AAZZUR and focusing on the benefits of BaaS and embedded finance.

Further down the FinTech ladder, smaller startups are most at the mercy of the market. If global volatility stays roughly the same or decreases, investment should continue. The level of innovation at some of these companies is too high not to support.

But if something throws the globe – and, in turn, the markets – into prolonged chaos, expect funding to dry up for almost everyone but the biggest names. And if 2008 showed us anything, a few big scalps are still to be expected.

It’s this that makes me so certain embedded finance and BaaS are set to see an investment surge. Both from investors and businesses themselves. Why? Because they allow traditionally sluggish businesses to finally start turning a profit, offering their investors a genuine return. Most importantly, it allows them to detach themselves from investment life support.

Right now, that’s just good business but at some point, that could mean survival.