The pandemic has been a great accelerator of existing digital trends, with none more evident than eCommerce. Global volumes of online transactions skyrocketed with global eCommerce sales growing by more than a quarter in 2020. During this massive shift, embedded financial solutions went from being an emerging novelty to a near-universal feature of online retail, with huge technological advancements alongside Open Banking-friendly regulation paving the way for innovation.
Online stores began offering their own financial products and services, like custom credit options, personalised cards and accounts and even insurance all at the point of sale. The convenience and accessibility of these products marked an indelible shift in customer expectations.
With embedded financial products growing ever more varied and numerous, retailers now need to stay at the forefront of cutting edge financial technology to keep up. And while pre-packaged third-party products offer a quick fix, retailers who integrate them run the risk of ceding both control of their user experience and valuable customer data. Smart brands are relying on Banking-as-a-Service providers who can deliver the technology, necessary licence and regulatory and compliance expertise needed to offer banking products directly within their ecosystem.
The wind is firmly in the sails of embedded finance, but we have only just begun to see the full scope of what it means for online retailers. So, what will its lasting impact be on eCommerce companies? And what should retailers expect in their future?
Behind the minds of retailers
To successfully predict what impact embedded finance will have on retail, we must first examine the driving factors behind its growing uptake. To this end, Vodeno surveyed more than 750 retail decision-makers from across the UK, Germany and Belgium to explore what has motivated the growing prevalence of embedded finance on their platforms, and what their plans are for the future.
Among those surveyed, there was no outstanding single reason for their adoption of embedded finance solutions. 41% selected ‘creating new revenue streams’ as a key motivator, while 40% chose ‘growing the customer basket’, viewing embedded finance as a means of increasing profitability. 40% viewed it as a means of increasing customer loyalty, and 38% wanted to improve customers’ satisfaction with the brand.
The difference between these motivations is indicative of the variety of benefits embedded finance has the potential to offer. It is not just a tool for increasing revenues or making the user experience more engaging – for 39% of respondents, it was primarily a tool for gathering improved customer insights.
When predicting the future of retail, these figures suggest that embedded finance has the potential to revolutionise retail as a whole, allowing businesses to build stronger bonds with their consumers while increasing sales volumes and leveraging data-driven strategies.
Examples of these new strategies are already emerging into the global retail market, with the US department store franchise Kohl’s recently announcing a new branded credit card that offers unique rewards and loyalty benefits to cardholders. With roughly two thirds (66%) of respondents stating that their business had engaged with technology vendors in the last 12 months to create their own embedded finance products, we can expect to see more and more of these types of use-cases in the near future.
What retailers can expect
The underlying technology and regulatory requirements of embedded finance are a major sticking point for non-financial businesses such as retailers.
Overcoming the difficulties of regulatory compliance was a primary consideration for 38% of respondents, who picked their vendor because they offered banking solutions independently with little development required on their part, and 34% prioritised vendors who had access to a banking licence for the geography that they operate in.
Given the extraordinary rate of change within consumer expectations today, having products that can be designed and launched at short notice is essential. 37% of respondents who had engaged with a technology vendor to implement their own products felt that being able to enable their retail partner to launch a new product quickly was a key factor in picking their BaaS partner.
What’s next for retailers
Based on the feedback from our survey, we can predict what the shape of the retail sector will be in the future.
We are not simply seeing eCommerce and embedded finance growing in tandem – embedded finance is elevating online retail by creating more engaging and rewarding customer experiences and making shopping online more appealing to users everywhere. We are seeing embedded finance bring brands and consumers closer together, and the attitudes and priorities of decision-makers today offer a glimpse into the retail landscape of the future.
There is limitless potential on offer for retailers who grasp the embedded finance opportunity firmly enough, but those who hesitate too long run the risk of being left behind.
The Indian government has achieved the milestone of inoculating over 150 crore vaccines. With the progressive unlocking happening in the majority of cities and villages across the country, the Omicron-led contagious third wave is anticipated to come under control soon.
by Vishal Maru, Senior Vice President Merchant Payment Services, Loyalty and Digital Payments, Worldline India
Physical shopping is regaining its lost glory as small retail outlets, malls are opening up while native markets are thriving. Amid all this, the requirement for quick, secure, contactless digital transactions remains a top priority for merchants and consumers alike.
Making embedded payment solutions available to all or any merchants across the country can help address these growing needs. Enterprise Resource Planning (ERP) solution has become critical for physical stores to assist in keeping track of inventory, system, and payment ledgers of the business. Today, most digital payment solution providers are realising the benefits of enabling ERP solution providers to integrate their billing software with POS terminals.
How does an embedded payment system work?
The embedded payment is about integrating payments options with enterprise resource planning platforms used by the merchants. This automates the process of entering the purchase amount manually in the POS terminals. It captures the card transaction details within the billing software for merchants. At the physical store, the selected items are added to the cart for billing by the merchant and therefore the system reflects the ultimate price including local taxes and discounts if any. Customers can pay by their preferred digital mode instantly because the waiting time is drastically reduced.
An advantage to the merchants
The Integrated system enables a merchant to supply quicker check-outs and error-free payment acceptance to the cardholders additionally to a quicker reconciliation of card transactions. Embedded payments on Android POS terminals make it a furthermore powerful and useful gizmo for merchants to manage their enterprise end-to-end because it is a mini kiosk with all features like payments, billing, inventory, reconciliation, customer loyalty, credit/cash history, BNPL, etc. on one single platform.
Embedded payments modernising most sectors
Embedded payments are changing the way businesses accept payment. It’s getting adopted across wide merchant categories like retail stores, hospitals and pharmacies, hotels, and quick service restaurants among others. This can not only help merchants to supply innovative payment acceptance but also first-of-its-kind contactless payment but automating their current billing processes and enhancing payment acceptance modes for quicker checkouts.
The growth within the size of the embedded payments is primarily thanks to increased government focus and initiatives that are aimed toward digitising the economy. It’s not to mention the customer-centric innovation that the industry is bringing to the table. As an example, POS terminals aren’t any longer limited to facilitating card transactions, it accepts payments via NFC-powered contactless cards, QR codes, UPI and offers several value-added services like EMI, DCC, among others. Additionally, it offers services like accounting and inventory management, payroll management, merchant financing, etc.
The connected POS helps hospitality players lead sales, invoicing, and orders at restaurants, rooms, activities, meals, and hotel boutiques. It will not only work in a restaurant but also for hotel activities, the boutique, and room service moreover. It ensures a connection between a hotels’ various departments, making it more efficient for the deployer while offering a flawless high-end customer experience.
From better inventory management to simplified invoicing, quick payments, and absolute customer satisfaction, embedded payments are adding value to the business and enhancing customer experience in every possible way for better and greater achievements.
As personal and business banking customers across the UK adopt digital technology at an accelerated rate in their everyday lives, this raises the industry benchmark for smarter, sleeker, and more innovative banking solutions.
Jon Munnery, Insolvency & Restructuring Expert, UK Liquidators
by Jon Munnery, Insolvency & Restructuring Expert, UK Liquidators
The coronavirus pandemic is a testament to business agility, as financial institutions swiftly transitioned to online operations under unprecedented economic conditions and overhauled communication infrastructures to maintain customer relationships virtually. The banking industry witnessed a watershed moment in consumer behaviour as the temporary closure of bank branches pushed those most resistant to change and opposed to embracing digital banking to test the waters.
Now that most Covid-19 restrictions have been lifted, how has this affected the footfall of bank branches?
Is it the end of an era for high street bank branches?
Taking it back to before the pandemic, customers moved to online banking in droves which saw footfall figures gradually dwindle, and further decline when the pandemic hit. This led to a record number of branch closures, with hundreds more set to close in 2022.
According to a House of Commons briefing paper, the number of bank branches in the UK roughly halved from 1986 to 2014. The decline in bank branches can be attributed to the following factors:
Cost-cutting measures
Mergers within the industry
Competitive pressures from new entrants in the banking sector
Increasing popularity of internet banking.
Which? have been actively tracking UK bank branch closures since 2015 and can confidently conclude that bank branches are closing at a rate of around 54 each month.
The NatWest Group, which comprises NatWest, Royal Bank of Scotland and Ulster Bank, will have closed 1,154 branches by the end of 2022 – the most of any banking group.
Lloyds Banking Group, made up of Lloyds Bank, Halifax and Bank of Scotland, has shut down 769 sites, rising to 830 in 2022.
Barclays is the individual bank that has reduced its network the most, with 841 branches having closed – or scheduled to – by the end of 2022.
The pandemic sped up the shift to online and mobile banking and provided banks with the optimum opportunity to showcase the potential of their digital services on offer. Data gathered by YouGov Custom reveals that over half (56%) of consumers say they will avoid bank branches in the future – thanks to coronavirus.
A new age of cutting-edge banking technology
While the hospitality industry speeds the way in innovative food delivery and the retail industry revolutionises in-store customer experiences – the banking industry is cementing its position as a trailblazer in fintech.
Here are some technological trends in the banking industry that are making bank branches redundant.
Mobile banking – The continued rollout of mobile banking services has drawn fierce competition from challenger banks responsible for driving away customers from household high street banking giants. The UK is leading the challenger bank revolution as the likes of Monzo and Revolut are best known for dominating the UK market. Revolut recently became the UK’s biggest fintech firm as its valuation peaked at £24 billion.
According to the Which? consumer champion’s current account survey, challenger banks are outperforming traditional high street banks, with users ranking Starling Bank, Monzo, and Triodos highly for their customer service and mobile apps.
The survey also found many traditional high street banks languishing at the bottom of the customer satisfaction table, often ranking poorly for service in branches. This not only diverts customers online, but fuels the takeover of digital banks and therefore, the decline of bank branches.
Chatbots – Digital humans or robo advisors powered by artificial intelligence are in use by many banking providers to streamline the customer service journey and generate an instant response to customer queries. It also cuts out any necessary time spent by human chat agents to answer non-complex queries, for which answers can be automatically populated from the website.
Artificial intelligence is also being used to improve the efficiency of back-end processes, such as data classification and risk analysis.
Mobile branches – Although digital banking is accessible for the majority, not everyone can navigate online banking services with ease. The demand for in-person services remains, albeit small, which brings us to the introduction of mobile branches. NatWest and Lloyds provide access to mobile bank branches to allow individuals to carry out basic banking, such as deposits and withdrawals.
While customers no longer need to visit a physical branch due to the advanced functionality of online and mobile banking, the expectation for fast and immediate customer services remains as customer support transitions online. In a world where support can be accessed almost instantaneously through the click of a button, the stakes are high for digital banks, their reputation and customer loyalty.
Open banking is coming up to the fourth year of PSD2 as a regulatory requirement in the UK. We can see the impact it has already had, and the predicted growth for the year to come. In addition, the pandemic has driven the growing demand for flexible financial services, and this has transformed how consumers and small businesses leverage their financial data.
As APIs continue to give financial institutions the ability to connect to both customers and businesses alike, security has become more important than ever. It is vital to evaluate the various measures that financial services need to adopt to thrive in a safe and secure way.
Carefully managing financial data has always been of the utmost importance for businesses. Failing to do so and leaving sensitive data to fall into the wrong hands can be critical for consumers, businesses, and banks. Financial-grade API security is paramount when it comes to exchanging data and financial information between institutions and third parties such as FinTech vendors and other partners.
Complexities of authenticating
It is important to have solid confidence in the users’ identity. This requires a Strong Customer Authentication (SCA) method, which generally translates to a high Level of Assurance. This is accomplished to some degree by using multi-factor authentication. Similarly essential, users must prove their identity as part of the registration and authentication process. To achieve this, the regulators require standards-based proven methods that ultimately result in a token (i.e., a ticket or memento) that encrypts and secures the identity of the user, their authentication method, and provides assurance that the user represented by that token really is who they say they are.
Users confirming consent
Authentication is important, but, alone, it isn’t enough. Open finance regulations are clear that users must consent to a business accessing certain data or performing an action such as creating a transaction. But it must also be possible for users to manage and even revoke their consent through an easy-to-use user management service.
Protecting users’ data
Securing and protecting users’ data can be a difficult task, but it’s a critical one in open banking. It takes a long time to develop trust – particularly when finances are involved – and it can be slashed in seconds if users lose confidence in a business’s ability to look after them and their data. As well as costing customers time, money, and resulting in extreme dissatisfaction, this can ruin a business’s reputation. Consequently, the safety of user data must be prioritised.
A blend of various procedures, frameworks and processes can be introduced to mitigate the risk of fraud, leaking or manipulating data and violating privacy. This is an opportunity to ensure consistent security practices are implemented across the board. Standards and directives such as PSD2 are designed to protect user data, as well as securing bank services. Businesses need to ensure they are investing in the right technology to adhere to these standards. By choosing solutions that automatically implement these specifications, businesses can reap the benefits of a secure customer database which will help improve the customer experience to build credibility and trust.
Prioritising skills
Businesses must also invest in their teams. It’s not enough to simply put protocols in place. Design and execution require a specific set of skills which, unfortunately, are high in demand and low in supply. Recent research commissioned by the UK Department for Culture, Media and Sport found that half of businesses in the country (approx. 680,000) have a basic skills gap, lacking staff with the technical, incident response, and governance skills needed to manage their cyber security. Meanwhile, a third (approx. 449,000) are missing more advanced skills, such as penetration testing, forensic analysis, and security architecture.
Regardless of being essential – considerably more so as services are progressively digitalised, cybersecurity skills are often poorly understood and undervalued by both management boards and within IT teams. This can prompt a lack of investment in training, mishiring, and poor retention of staff in security roles. This only intensifies the challenge of building a team that possesses the requisite skills.
Hiring can be hard when there’s a deficiency of skills and abilities, so businesses need to be innovative. This means considering new recruitment avenues and, importantly, breaking free from the conventional model of what cyber security professionals look like. Curiosity is vital, so, for more junior roles especially, attitude should be a key qualification. Businesses should trust that many skills can be acquired on the job if the candidate has the essential fundamental knowledge and drive. To help with this, employers should provide training and mentorship.
The future is looking bright for financial services. The way banks do business and how consumers manage their financial transactions will continue to revolutionise. New opportunities and new practices are likely to arise meaning security remains an important factor to combat any future requirements.
As we continue to assess financial-grade security and authentication protocols, success will also rely heavily on expertise and know-how. The skills gap in security needs to be considered to ensure that flexible finance options within open banking and open finance can be utilised without compromising security. Businesses must ensure they are prioritising training for the team to close this skills gap and improve practices across the industry. There is a massive opportunity to push protocols and standards across the board, as it will not only help to ensure a high level of security but also makes skills more transferable in the long term.
While consumers’ online activity had seen steady growth for years, Covid-19 turbocharged this. In retail, internet transactions as a percentage of total sales hit a high of 38% in January 2021, against 20% before the pandemic, according to the ONS. Even a year later, with all restrictions lifted, they remain at 27%.
by Clare Beardmore, Head of Broker and Propositions, & Jodie White, Head of Product and Transformation, Legal & General Mortgage Club
Jodie White, Head of Product and Transformation, & Clare Beardmore, Head of Broker and Propositions, Legal & General Mortgage Club
Meanwhile, online banking was already well developed prior to Covid-19. More than three-quarters of adults in Britain used internet banking in the opening months of 2020. Yet open banking services have also witnessed rapid and massive growth over the past two years. January 2020 saw the number of customers using open banking in the UK pass one million. Nine months later, that doubled. Today, there are five million users.
There’s little doubt when it comes to the public’s appetite for digitally-enabled services. Among brokers, however, it’s been more mixed, and uptake varies widely.
But customer expectations are growing. Developments inside and outside the sector are leading to increased expectations for fast, smooth digital experiences. Customers increasingly demand solutions that will make their mortgage journey easier and quicker. And they want to be able to choose how to work with their broker.
Advisers that fail to offer a digital approach and communicate through online channels will only be restricting their ability to reach these customers. In this environment, the bar set by market leaders soon becomes the standard. Those who are yet to offer a range of digital communication channels risk hindering customer retention or may find themselves bogged down with administrative tasks, preventing them from doing what they do best: providing advice.
In short, a strong digital offering is becoming table stakes in the advice sector.
No need to reinvent the wheel
The good news, however, is that brokers don’t have to do this by themselves, and they don’t have to do everything. They’re not technology businesses after all.
Instead, brokers should avoid the gimmicks and look for technology that adds value for themselves and their customers. In most cases, they are one and the same: Technology that reduces inefficiencies in the mortgage process and friction cuts brokers’ costs, as well as the inconvenience and delay for clients.
Any serious adoption of technology must focus on the impact on the end customer. Consequently, a serious examination of existing technology cannot do better than begin with customer relationship management (CRM) systems.
Customer relationship management is critical to the client’s journey. It plays a central role in capturing and managing borrower information and streamlining the loan process. Its importance has meant that a wide range of robust existing systems is currently available. There’s no need to reinvent the wheel – nor even to invest; Legal and General’s Mortgage Club, for instance, provides certain members with free licenses to the Smartr365 technology platform, which includes a comprehensive set of CRM tools.
By automating tasks, eliminating effort, and providing workflows to accelerate the mortgage process, CRM systems are critical to meeting modern customer expectations. However, they can’t and don’t aim to replace the broker.
The human touch
For advice, the human factor is still vital. That’s reflected in the continued dominance of intermediaries in lending. Over seven in ten buyers used an adviser for their most recent purchase. With borrowers facing a sustained rise in interest rates for the first time in a decade, and finances squeezed by rising inflation and a cost of living crisis, that’s not going to change.
CRM technology, however, can boost efficiency and free time for brokers to spend working with clients to find the best solutions. It also promotes continued engagement to enhance retention.
Rather than replacing the broker’s expertise, the technology enhances advice by enabling advisers to apply their knowledge more effectively. To give one example, intuitive checks built into an affordability calculator share a far more complete picture by revealing why certain inbound leads might be failing. That allows intermediaries to offer better-tailored advice to customers.
Crucially, the technology must serve the advice journey, not determine it. The way to avoid that is to integrate digital capabilities in a wider transformation journey focused on using the tools available to meet customer needs and support advice. To do so, brokers must embrace technology, as their customers already have done.
Those that don’t could be bringing the next crisis on themselves.
The banking industry has undergone huge change in recent years, and so too have its players. As such, the time-honoured classifications of ‘incumbent’, ‘challenger’ and ‘neobank’ no longer sufficiently describe a bank’s offering, role or position in the industry; arguably some incumbents are proving to take more ‘challenging’ strategies than some of their comparatively younger challenger or neobanks. So how will banks be defined in the future?
Rivo Uibo, Co-Founder and Chief Business Officer at Tuum
by Rivo Uibo, Co-Founder and Chief Business Officer at Tuum
The evolution of banking is partly in response to an underlying shift in the way that people live and work and the demand across diverse demographics for more tailored banking services. Freelance workers have different banking needs to employees; the needs of Gen Z customers, such as saving money and managing subscriptions (including Spotify, Netflix etc.) are far removed from those of older generations. In essence, to prosper in today’s banking industry, banks must now find a means of being relevant to diverse customer demands and desires and provide these banking services in the most convenient way.
In tandem with this trend, the advent of embedded finance, open banking and APIs together with the rise of new entrants to the market including tech giants and superapps and demand aggregators (brands that provide financial services on top of their core offerings such as Alipay, Uber payments or Gusto wallet), are adding further complexity to the banking landscape and the number and diversity of players.
Banks are therefore under pressure to maintain market share and are looking at different approaches to achieve this. Let’s look at the different business strategies that banks are pursuing today and where these business models are likely to lead to.
High street banks
Even before the pandemic, high street banks were ramping up their digital offerings and reducing their number of branches. But in the wake of the pandemic and soaring demand for digital banking, high street banks face strong competition from online-only banks. As a result, they have radically reduced their number of branches; according to a report by Which? published in December 2021, almost 5000 UK bank branches had closed since 2015 or were set to close in 2022.
That being said, In the UK, high street banks offering personal and business banking (including RBS, Barclays, Lloyds and HSBC) are still regarded as the market leaders and mainstays of the industry. Only time will tell if their (albeit reduced) in-person banking services and industry standing will be enough to survive heightened competition from their more nimble digital counterparts. In the meantime, these mainstream banks will be closely analysing the options open to them to maintain customer share (greater focus on digital/focus on other market segments).
Digital banks
These forward-thinking, online-only banks provide banking services that fully reap the efficiency benefits of modern technological capabilities. Leading digital banks currently include the likes of Monzo, Nubank and N26. These large players, which started out as ambitious neobanks, have succeeded in gaining a sizeable customer base through innovative, digital service offerings. N26 is today one of the most valued banks in Germany and is aiming to be one of the biggest retail banks in Europe (without having a single branch) while Nubank boasts 40 million customers in Brazil.
Aside from these larger successful players, many digital banks tend to be niche players, laser-focused on the banking needs of one specific customer group. These financial service providers are made up of both those who have their own licence and those that depend on other banks or banking platforms for their licence – but both are perceived equally by end-users as ‘digital banks’. Their strategy is to gain maximum traction within their target customer segment and then expand and enhance their service offerings. A great example of a niche digital bank is Jefa, a LATAM bank set up by women for women, offering free accounts, a debit card, and a mobile app to assist money management. With the defaults of banking in LATAM broadly hostile to women customers, Jefa is making headway in a giant untapped market that has been ignored by other banks. Another good example is New York-based Daylight, a digital bank that offers services specifically tailored to meet the needs and assist with the financial challenges of LGBTQ+ people and their families.
Notably, as long as a financial institution is fully regulated and users’ money is protected, customers are beginning to show less loyalty for long-standing banks and are increasingly motivated by innovative services and excellent customer experience from digital banks. The rise of platform players – in the form of next-generation core banking and BaaS platforms are playing a key role in enabling digital banks to quickly roll out new tailored banking services and driving innovation in everyday banking.
Multifaceted banks
These banks succeed in functioning in multiple modes; they successfully provide banking services directly to their own diverse customer base while also opening up their infrastructure to provide the technology and licence to third parties.
Goldman Sachs is a key example of such a bank today. It launched a consumer banking brand, Marcus, in 2016, together with a new transaction banking unit, which amassed $97 billion and $28 billion in deposits by 2020 respectively. Goldman Sachs opens up the underlying infrastructure that powers Marcus and its transaction banking unit to external third parties as well, such as Stripe or Apple. By leveraging both its balance sheet and regulatory expertise as well as a modern platform, it is an attractive embedded banking partner for large sticky brands.
Starling Bank is another (online) bank that together with providing award-winning digital banking services to its own customers (it has been voted Best British Bank in the British Bank Awards for the last four years), it also offers its own infrastructure to other banks and fintechs in order for them to roll out financial services.
As embedded finance and the rollout of financial services by non-banks takes off, banks that can offer their infrastructure and banking licences will become increasingly in demand.
Only time will tell exactly what the banking landscape will look like in the future but what is very clear is that the age-old classifications of banks need reconsidering. And in order to survive and thrive banks themselves need to decide what path to take. We are entering a stage in the evolution of the sector where there is no clear roadmap for a given incumbent or a given challenger bank. Each individual bank needs to assess its strengths and ambitions and re-evaluate its strategy to carve out its own place in the industry.
The growing demand for personalised and relevant services will mean that only a minority of banks will be able to operate on multiple levels because it is hard for a bank to be everything to everybody. In the meantime, advances in banking technology and the growth of platform players supporting digital banks will enable this segment to further expand and diversify while the banks that serve both their own customers and support other third party banks and fintechs will help to drive competition and bring about more choice and more options for customers in the future.
As nations worldwide continue to sanction Russia in condemnation of their invasion of Ukraine, companies have now joined the movement to exclude the Russian government – and sometimes Russians – from their list of clients. Some of these companies have decided to ban them following international sanction provisions from The Office of Foreign Assets Control (OFAC).
Others have taken this decision as a show of solidarity with the Ukrainian people. However, not all FinTech companies are placing blanket boycotts on Russian citizens. The most notable holdouts are Binance and Kraken, citing the argument that banning “innocent Russians” goes against the philosophy behind cryptocurrencies.
So, let’s go through the reactions of fintech companies to the Russian invasion and explore how they affect the socio-economic climate in Russia and the rest of the world.
SWIFT
As pressure mounted on SWIFT to respond to the Russian invasion, the payment network obliged by suspending 7 major Russian banks from performing transactions indefinitely. The ban stops these Russian banks from accessing their global economic resources, but the country has outlined measures to combat the hard-hitting impacts of the SWIFT suspension. In anticipation of incoming economic sanctions, the Russian government developed SPFS (System for Transfer of Financial Messages) — a SWIFT equivalent that works only in Russia and some banks in Switzerland, Kazakhstan, Azerbaijan, Cuba, and Belarus.
Russia now has to rely on China’s more formidable Cross-border Interbank Payment System (CIPS) for international transactions.
VISA
According to Statista, VISA owns 12% of all credit payment cards in the world (335 million credit cards), accounting for about 50% of the overall market shares. The company reacted to the Russian invasion by halting all its operations within Russia and banning Russian VISA cardholders from processing transactions.
According to VISA’s official statement, the company is ‘taking prompt action to ensure compliance with applicable sanctions, and is prepared to comply with additional sanctions that may be implemented’. The VISA Foundation has also donated a $2 million grant to the US Fund for UNICEF to provide the Ukrainian people with humanitarian aid.
Mastercard
Mastercard has maintained the same ironclad stance as VISA on the Russian invasion. The credit card company has reportedly forfeited about 4% of potential revenue by excluding Russians from its services.
Mastercard CEO Michael Miebach released a statement saying that the company has ceased operations in Russia, as well as banned certain Russian banks from the payment network. Miebach also affirms that the company has sent a $2 million humanitarian fund to the Red Cross, Save the Children, and employee assistance.
Amex
American Express has also joined the ranks of Visa and Mastercard in suspending all operations in Russia and Belarus. According to a memo from American Express CEO Stephen J. Squeri, the cards issued in Russian territory will no longer work in Russia or outside the country. As part of Amex’s “Do What is Right” code, the company has pledged $1 million to humanitarian organizations to provide relief to people in Ukraine affected by the war.
Source: Mykhailo Fedorov (Ukraine’s Deputy Prime Minister and Minister of Digital Transformation) on Twitter
PayPal
PayPal has also halted all operations in Russia until further notice. Dan Schulman, PayPal CEO, released a statement saying: “PayPal supports the Ukrainian people and stands with the international community in condemning Russia’s violent military aggression in Ukraine. The tragedy taking place in Ukraine is devastating for all of us, wherever we are in the world.” He goes on to add that despite banning Russians from using PayPal’s services, the company will still provide support for Russian citizens within its workforce.
Payoneer
Payoneer’s reaction was to stop all issuance of cards to customers with postal or residential addresses within the Russian Federation. According to the company’s updated FAQs, Russian citizens with Payoneer cards issued outside Russia can still conduct transactions without restrictions.
Upwork
In an open letter to freelancers, Upwork CEO Hayden Brown reiterated the company’s mission to help improve people’s lives. As a result, with over 4% of registered freelancers from Russia and Belarus, Upwork has suspended operations and has shut down support for new business generation in both countries. To this end, the changes will take full effect on 1 May 2022, leaving freelancers and clients in Russia and Belarus unable to create new accounts, initiate new contracts, and appear in searches. The platform also donated $1 million to Direct Relief International to support Ukrainian citizens caught up in the war.
Revolut
As a company with a Ukrainian co-founder Vlad Yatsenko, Revolut has provided unwavering support for Ukrainians suffering from the war. The current CEO Nikolay Storonsky, born in Russia to a Ukrainian father, released an open letter, categorically condemning the war, saying that ‘this war is wrong and totally abhorrent’ and that ‘…not one more person should die in this needless conflict’.
In a statement titled The War on Ukraine: Our Response, Revolut has affirmed its dedication to uphold and impose sanctions placed on Russia. As part of its support to Ukraine, Revolut has removed transfer fees for every transaction going into the country. The company has also pledged to match every donation made to the Red Cross Ukraine appeal.
Stripe
Although Stripe does not work in Ukraine, Russia, or Belarus, the financial services and SaaS company has pledged to impose sanctions on the Russian government and its citizens. The extent of this ban will cover transactions using the Mir payment system, as well as services linked directly or indirectly with the Crimea and the separatist Luhansk and Donetsk regions.
Paysera
Paysera has released a comprehensive list of financial restrictions on Russia and its allies involved in the Ukrainian invasion:
Russian citizens will no longer be able to use Paysera (this restriction does not apply to Russian citizens with residency or work permits in other supported countries).
All current accounts belonging to Russians will be closed.
Russian and Belarusian companies are banned from using their Paysera accounts.
All current business accounts belonging to Russian and Belarusian entities will be closed.
Transactions to Russian and Belarusian banks between private individuals will continue but must go through rigorous verification procedures.
Paysera will roll back all money transfers from Russian and Belarusian banks received on Monday (23 February and later).
Paysera users can no longer exchange to Russian Roubles (RUB).
This list is only one part of the extensive regulation changes for Russian citizens and banks. For more information, read the entire press release.
Apple (Apple Pay) and Google (Google Pay)
Apple and Google set rivalries aside to impose a collective ban on the Russian government and its citizens for their actions in Ukraine. According to NPR, Apple will stop shipping products to Russia with immediate effect. This announcement sent shockwaves around the tech world because of the company’s global influence.
In the same vein, Google has also removed media platforms RT and Sputnik from its services, banning their content within EU countries.
But that’s not even half of it. Apple has furthered its crackdown on Russia by deactivating its payment service Apple Pay in the region – 29% of Russians rely on Apple Pay for contactless payments. Similar to Apple, Google Pay (used by 20% of Russians) has also ceased all digital payments by Russian citizens within occupied territories.
Money transfer services
According to Statista, the value of cross-border money transfers made by Russians in 2020 were worth over $40 billion, which is by almost $8 billion less than in 2018. In 2022, however, this sum is likely to be much lower taken the situation with the money transfer services that are leaving the Russian market.
Western Union
On 10 March 2022, Western Union issued a press release announcing that all the company’s operations in Russia and Belarus will be suspended with immediate effect. For the people of Ukraine, Western Union has created a donation portal to address the humanitarian and refugee crisis, according to Elizabeth Executive Director of the Western Union Foundation.
The money transfer company has pledged $500 000 to provide humanitarian aid to the Ukrainian people. To donate to the Western Union Foundation, visit its official website.
Wise
Before the 2022 Russian-Ukrainian war, Wise (formerly TransferWise) had already placed a $200 limit for Russian account owners. With the current swathe of sanctions, the remittance and payments company has doubled down on its restriction for individuals and businesses within the Russian Federation and its (illegally) occupied territories.
Find a detailed breakdown of the restrictions according to the company’s Help Centre below:
You can only send RUB to private bank accounts or cards in Russia.
You cannot send RUB to government agencies in Russia.
You cannot send RUB to Crimea or Sevastopol.
You cannot send USD or EUR to accounts in Russia.
MoneyGram
According to Quartz, MoneyGram still works both in Ukraine and Russia since the sanctioned banks — Sberbank (Russian) and VTB — are not involved in the transactions directly. This same report also shows that, on the first day of the invasion, US-based remittances to Ukraine spiked 120%, while the number rose to 50% in Russia. Nevertheless, MoneyGram has removed all fees on transfers going to Ukraine from the US, Canada, and EU.
Remitly
Remitly is a P2P service that allows immigrants to send money across borders. Since the company’s core demographics (immigrants) are closely aligned to the plight of Ukrainian refugees, it is no surprise that tit has also banned Russia. Remitly, through a spokesperson, has communicated its dedication to upholding this ban according to the EU and US sanctions.
Source: World Remit on Twitter
Zepz (WorldRemit)
Zepz, formerly WorldRemit, has released a list of countries on its banned list, including Russia and Belarus. The company also released an updated list of transaction conditions, showing that Russia is on the blocklist until further notice.
“The Big Four”
Members of the Big Four — Deloitte, Ernst & Young, KPMG, and PwC — have also enforced the sanctions imposed on Russia by the US and EU nations. At the time of compiling this report, the aforementioned companies are not in a hurry to impose blanket sanctions on all Russian citizens since a combined 1.1% (around 13000 people) of their global workforce is in Russia.
Deloitte’s Global CEO Punit Renjen said: “Last week, Deloitte announced it was reviewing its business in Russia. We will separate our practice in Russia and Belarus from the global network of member firms. Deloitte will no longer operate in Russia and Belarus.”
Mark Walters, KPMG’s Global Head of Communications, said: “KPMG has over 4,500 people in Russia and Belarus, and ending our working relationship with them, many of whom have been a part of KPMG for many decades, is incredibly difficult.”
Mike Davies, PwC’s Director of Global Corporate Affairs and Communications, PwC UK, said: “As a result of the Russian government’s invasion of Ukraine, we have decided that, under the circumstances, PwC should not have a member firm in Russia and consequently PwC Russia will leave the network.”
EYreleased a statement that said: “Today, EY global organisation decided that the Russian practice will continue working with clients as an independent group of audit and consulting companies that are not part of the EY global network. The changes will take effect after the required transition period.”
Source: Mykhailo Fedorov on Twitter
The crypto world
Although the major players in FinTech are equivocal in their condemnation and boycott (full or partial) of Russia, the crypto community maintains partial neutrality. The overarching sentiment within the world of crypto is that private citizens should not suffer due to the actions of their governments. After all, some of these individuals might be using cryptocurrencies to oppose tyrannical regimes.
Notwithstanding, the Russian Central Bank has proposed a ban on mining and trading cryptocurrencies. With Russia occupying third place among Bitcoin mining regions globally, the impacts on the value and volatility of the crypto market might be extensive.
On its part, Ukraine has also used crypto assets to fund its defence against Russian aggression. Ukraine’s Deputy Prime Minister Mykhailo Fedorov has also posted wallet addresses for the Ukrainian Army and Civil Defense support.
Source: Jesse Powell on Twitter
Kraken
CEO of Kraken, Jesse Powell released a Twitter thread in response to the Ukrainian Prime Minister’s call on crypto exchanges to block addresses of all Russian users. In the thread, he expresses regret for the appalling conditions Ukraine finds itself in at the hands of its aggressive neighbours. However, he insists that the company cannot blanket-ban citizens ‘without a legal requirement’ to do so.
Binance
Binance CEO, Changpeng Zhao, released a detailed statement refuting claims that ‘Binance doesn’t apply sanctions’. He expressed that Russian individuals banned by US and EU sanction regulations are not allowed to trade on Binance.
KuCoin
KuCoin CEO Johnny Lyu also refuses to freeze the accounts of Russian users, unless there is a legal precedent to do so on a case-by-case basis.In a statement to CNBC, the CEO expressed KuCoin’s stance on the issue: “As a neutral platform, we will not freeze the accounts of any users from any country without a legal requirement. And at this difficult time, actions that increase the tension to impact the rights of innocent people should not be encouraged.”
Source: Brian Armstrong on Twitter
Coinbase
According to Coinbase’s Chief Legal Officer Paul Grewal, the company has blocked over 25000 accounts linked with “illicit activity” with the Russian government and its allies. While the crypto exchange is dedicated to helping the Ukrainians, they refused to freeze the assets of ‘ordinary Russians’.
Nevertheless, Coinbase has implemented measures to monitor attempts by sanctioned individuals to evade the restrictions. The crypto exchange will also follow recommendations that align with government recommendations, provided they don’t interfere with individual rights.
Adyen
Although the Ayden network does not work in either Russia or Ukraine, the company has decided to offer humanitarian help to the victims of the ongoing invasion. Adyen’s policy decisions include:
Blocking sanctioned banks and private entities
Suspending US and EU processing services in Russia, Crimea, and the separatist regions in Donetsk and Luhansk.
Suspending transaction processing in Russian rubles (RUB) regardless of issuing country.
To the Ukrainian people, Adyen has pledged humanitarian support through Adyen Giving and other charities like the UNCHR Disaster Relief Fund, Giro 555, and the Red Cross.
Mintos
The loan management platform Mintos has removed loans from Russian and Ukrainian lending platforms as a ‘cautionary measure’ to protect lenders from the unprecedented repercussions of the invasion. As part of the Mintos Conservative Strategy, the company will uphold these restrictions until the conflict stabilises – or ends.
eToro
When eToro announced that it would be force-liquidating Magnit PJSC stocks (and other related Russian stocks), they probably didn’t expect such a massive amount of pushback from users who had equities in these companies. As a result of the criticism and public outcry, the company refunded all affected parties, except for leverage stakes. Despite the earlier wave of backlash, eToro is still considering what to do with nine other stocks from the country, including Sberbank of Russia, Rosneft (RNFTF), Gazprom, and Lukoil.
Conclusion
The Russo-Ukrainian war has plunged the entire financial sector into a new reality, which follows post-pandemic inflation. We are now witnessing an unprecedented situation – financial institutions and FinTech companies are reacting in real-time to impose sanctions and boycotts on Russia and its citizens. Numerous companies that aren’t obliged by law or sanctions have taken the initiative to leave the Russian market. These decisions cost each of them a significant part of revenue, yet they demonstrate the willingness to pay this price in order to help stop the war.
FinTech is synonymous with innovation and is a key industry in this country. Its influence spans the globe, however, and makes it a primary player in the move towards greater financial and environmental sustainability.
by Keith Tully, Real Business Rescue, a company insolvency and restructuring expert.
Corporate social responsibility has been a pivotal business model for decades, but the 2021 COP26 Climate Change Conference in Glasgow clarified the urgency to act with purpose and laid out in stark detail the consequences for the planet if we don’t.
The FinTech industry is ideally placed to use its prominent standing on the global stage, therefore, and positively influence the crucial issues we face. It can set a ‘green’ example for others to follow, ensuring businesses adopt sustainable practices and leading the way towards a lower-carbon future for industries across the board.
How can Fintech businesses take a stand on sustainability?
Operate a ‘green’ supply chain
Fintech’s inherent use of big data, artificial intelligence, and real-time information, makes the industry a perfect role model when implementing environmentally friendly and sustainable logistical practices.
Transparency and collaboration between supply chain members is a necessity for a ‘green’ supply chain to work, and this ultimately reduces waste and increases cost-effectiveness for all participants.
Develop ‘green’ technologies
The industry continues to provide cutting-edge solutions that streamline and modernise financial procedures and payment systems, and can positively influence corporate behaviours.
Brand reputation strengthens when businesses use innovative financial technologies – they become trustworthy within their industry and in the eyes of the wider community. The investment in ‘green’ solutions consolidates the drive for sustainability and enables ethical conduct and business behaviours to be put in place.
Innovative banking and payment solutions
The banking and payments industries have transitioned, almost beyond recognition, in the last few decades. Although the ‘traditional’ high street banking services are still available, the development of new financial technologies has created a thoroughly modern alternative for businesses and individuals.
The Fintech industry has developed highly sophisticated, cost-effective, and sustainable banking and payment systems that help businesses reduce their carbon footprint. Blockchain is one such example, and this provides a platform that supports other technologies such as new payment and finance solutions.
Data analytics
Big data provides in-depth perspective and insight into various areas of business and offers key decision-makers a solid foundation for making strategic plans. It can also be used to keep a business on track towards financial and environmental sustainability.
Global financial services group, BBVA, uses technology to help organisations calculate their carbon footprint using data analytics, for example. Businesses can calculate their carbon footprint and then register on The Carbon Footprint Registry.
The ‘Climate Registered’ seal placed on their websites and promotional materials demonstrates the business’ commitment to sustainability, and to reducing their carbon footprint.
Make sustainability the USP
Adopting good practices and promoting financial and environmental sustainability enables Fintech companies to differentiate themselves, and to stand out in an increasingly crowded industry.
Making sustainability their unique selling point within a ‘Green Fintech’ umbrella of innovative technologies and working practices reiterates the drive to help tackle climate change whilst promoting a sense of purpose and well-being among staff.
Sustainable financial products
Figures published by Statista show how significantly Fintech solutions have changed the way in which we bank and carry out our financial business as a nation.
In 2007, only 30 per cent of banking customers regularly used digital banking services, a figure that has risen to 76 per cent in 2020. Personal finance budgeting and investment apps also help people achieve their own individual goals for sustainability.
Fintech businesses can measure and verify the impact of sustainable financial products, such as ‘green’ bonds, loans, and investment funds, and make adjustments as necessary to improve the products.
The case for taking a stand on financial and environmental sustainability
The positive case for taking a stand on sustainability is clear. It’s what is needed if we are to head off total climate catastrophe. This movement also holds significant benefits for individual businesses in terms of their reputation and place in the community, however.
Sustainability is an issue close to people’s hearts, and staff can rally around such a cause. This increases morale and creates an inclusive working environment that promotes well-being and productivity.
Apart from the key benefit of creating a more sustainable operating environment for businesses within the industry, Fintech’s considerable influence could also affect far-reaching change in other industries.
In fact, Fintech is in the perfect position to lead on financial and environmental sustainability. Introducing new ‘green’ financial products and creative payment systems not only helps other businesses on a practical level, but also sets the high environmental and financial sustainability standards that we need, and that others will follow.
Like most criminals, cyber hackers want an easy life. Just as burglars prefer forgotten open windows over picking front door locks as a way in, so their digital counterparts are looking for targets that offer maximum return for minimum effort.
As such, while major corporations wise up to the threat of sophisticated attackers and invest in the sort of defences that limit the impact of bad actors, criminals are now turning their attention to potentially easier targets. And that includes businesses that are raising capital or those that recently announced funding – particularly when those businesses not only hold significant financial data but also potentially offer gateways, or open windows, to other companies.
It’s thus no surprise that ransomware attacks are increasingly targeting Private Equity (PE) firms and their portfolio companies (PortCos). As attacks increase, it’s imperative that investors become more aware of the risks they face and take swift action to protect themselves – and their portfolio companies.
Cyber vigilance as a differentiator
Cyber vigilance is increasingly becoming a differentiator for investors when considering companies to add to their portfolios. Gartner highlighted that “by 2025, 60% of organizations will use cybersecurity risk as a primary determinant in conducting third-party transactions and business engagements,” and in doing so noted that “Investors, especially venture capitalists, are using cybersecurity risk as a key factor in assessing opportunities.”
There’s also regulatory pressure to get houses in order. In February, the Securities and Exchange Commission (SEC) voted to propose a new set of cybersecurity rules to oversee how alternative investments or private capital firms manage risk, requiring clear policies and procedures to be put in place. In addition, advisers would need to report incidents that impact their firms, funds or clients.
Clearly, PEs need to be as rigorous in checking their own windows are closed as they are in running the rule on the security posture of target companies. For most, it means a wholesale change in their approach to cyber security. The question is, how do they begin to implement this new approach? Securing your own operations is hard enough – how do you extend that to other entities in your orbit?
Check your windows
First, it’s worth considering what open windows there could be. One of the most glaring yet overlooked open windows is the employees at PEs and their PortCos. This isn’t to suggest that everyone is maliciously trying to undermine their employer (though insider attacks do happen), more that too often an assumption is made that workers understand the ways in which they can be targeted.
The reality is that many people don’t realize how many cyber threats are designed to exploit people’s ignorance or naivety. From ransomware to phishing attacks, many of the major leaks we read about in the news can be traced back to individuals who didn’t realize they shouldn’t click on a link, open a suspicious attachment or download an app at work.
Like any good burglar- why would a cyber thief spend time trying to crack encrypted corporate networks when they could simply gain access by targeting unsuspecting employees? They wouldn’t. That’s why
the first step in any PE firm’s cyber security approach should be to focus on educating staff, starting with the PE firm itself and then extending out to its PortCos to ensure they are undertaking similar processes.
Similarly, it’s not too difficult for attackers to take advantage of a lax approach to updating software. Technology is constantly evolving, and changes to critical systems can bring immense business benefits and operational efficiencies – but can also create new gaps in defences. PE firms and their PortCos must ensure that they have a rigorous and consistent process to keep systems up to date and fix bugs as solutions are released to prevent attackers from exploiting any holes.
Sophisticated responses for new attacks
Those are just two of the windows that can be closed relatively quickly. But the fact is that attacks are becoming more sophisticated, which means the responses must too.
Only real-time cyber risk monitoring will enable firms to protect their most sensitive data and safeguard against internal and external threats. That means firms must have more than the traditionally adequate technical and logical controls – they need active, continuous risk mitigation solutions and reporting, and cyber programs that are tested using real-world scenarios that provide a clear picture of how the business would defend against and respond to an incident.
A case of when, not if
Ultimately, PE firms and their PortCos need to realize that it is a case of when, not if, they are targeted. Most businesses understand and accept it; what they will not accept is inaction, attempts to hide issues, or a failure to mitigate the impact.
That’s why the new SEC rules are pushing for incidents to be reported, and why the European Union’s General Data Protection Regulation (GDPR) has fines in place for companies that have not done everything they can to reduce the risk of data breaches. Those businesses that do not do everything in their power to respond appropriately to incidents will not only have to deal with the immediate fallout of the attack itself, but subsequent legal, financial and reputational consequences.
Close the windows to protect firms and PortCos
It’s one thing to be undone by a sophisticated attack that may be far ahead of any of your existing defences; it is quite another for an opportune bad actor to sneak in via an open window. Cybersecurity is challenging, and it’s only becoming more complicated as attackers become more sophisticated and geopolitical threats rise. It’s clear that if there was ever a time to pay attention to cyber risk and buttress your defences, it is now.
The best way for PE firms and their PortCos to protect their organizations is to make it as hard as possible for cyber attackers to gain access. Invest in the right real-time cyber risk monitoring, confirm all your systems are patched and up to date and have your comprehensive incident response plan tested and ready to go on a moment’s notice. Put simply: Don’t be an open window.
Globally in 2020, more than 70 billion real-time payment transactions were processed – an increase of 41% compared to the previous year.
by Charles Sutton, Financial Services and FinTech Lead EMEA, Nvidia
This massive rise in transactions has presented an opportunity for criminals to conduct more fraudulent activities like account takeovers, chargeback fraud, or identity theft, resulting in more than $1 trillion stolen in cybercrime activities in 2020 alone.
NVIDIA’s 2022 State of AI in Financial Services survey found that implementing artificial intelligence (AI) is one way financial institutions protect their customers, data, and bottom line.
Top trends for AI in financial services
Given the vast increase in fraudulent activity, it’s unsurprising that the top AI use case identified by financial services professionals is for fraud detection. 31 percent of respondents use it to protect customer payments and transactions, up from just 10 percent in 2021.
Conversational AI, a type of AI where humans can interact naturally with machines by simply conversing with them, entered the top three use cases this year with 28 percent of respondents using it, followed by 27 percent using AI for algorithmic trading.
Compared to 2021’s survey results, 2022 shows a significant increase in the percentage of financial institutions investing in AI. Conversational AI increased by 8 to 28 percent, know your customer (KYC) and anti-money laundering (AML) fraud detection rose from 7 to 23 percent, and recommender systems increased from 10 to 23 percent.
What AI use case is your company investing in?
There are many uses for AI across the financial services landscape.
The report shows that fraud detection of transactions and payments is key for fintech, investment banking, and retail banking institutions. Conversational AI is a priority for capital markets and retail banking, and recommender systems are important for capital markets and investment banking.
Conversational AI for fraud detection and more
Increased fraud attempts have a significant impact on operations, so naturally, it falls high on the priority list for most financial institutions.
Natural Language Processing (NLP) is a form of conversational AI that can be leveraged across KYC and AML. An NLP algorithm can be trained to know everything about a customer – their spending habits, financial histories, unique risk factors, and even voice and behavioral biometrics – to reduce the risk of money laundering and other types of fraudulent activities.
It’s not all about fraud, though. NLP can also be used to optimize and transform the customer experience. Customer experience is incredibly important. In fact, just a one-point decline in a business’ customer experience score can equal $124 million in lost revenue for multi-channel banks, according to Forbes.
In an increasingly 24/7 world, and with a growing volume of customer calls, virtual assistants can be on call day and night to assist with simple inquiries such as account-related questions or product applications. UK-based NatWest’s digital assistant, Cora, is handling 58% more inquiries year on year, completing 40% of those interactions without human intervention. According to Jupiter Research, virtual assistants and chatbots are expected to result in savings of $2.3 billion by 2023.
NLP can also be used for recommender systems. It can generate personalized, recommended offers and next-best actions for each customer based on their individual data.
What does the C-Suite think?
The State of AI in Financial Services survey includes financial professionals across various roles, from c-suite to developers, IT leaders, and managers. This perspective allows for a broader understanding of how groups within an organization perceive their AI capabilities. The survey found that 37 percent of the c-suite view their AI capabilities as industry-leading, whereas only 20 percent of developers have the same perception.
When looking at the challenges organizations face when trying to achieve their AI goals, the c-suite, developers, and IT are unanimous on their concern for lack of data, lack of budget, too few data scientists, poor technology infrastructure, and explainability.
Creating Exponential Value with AI
Knowing a challenge means it’s possible to find a solution. There are several steps companies can take to improve the impact AI can have on customer satisfaction, operational efficiency, and revenue growth.
Successfully moving AI into production is an area of opportunity for organizations, which the survey found that only 23 percent of organizations currently think they can carry out. Knowing the target business outcome, identifying key performance indicators for measuring success, and building the research project as a pilot so that workflows are in place are best practices organizations can implement to improve their ability to scale AI applications into production.
Just 46 percent of organizations use explainability in their AI and machine learning operations. Supporting explainability is critical to integrate into a firm’s overall AI governance practice and doesn’t always need to be done in-house for teams that don’t necessarily have the right expertise.
Pursuing ethical AI is the third opportunity highlighted in the report. Only 26 percent agreed that their organization understands the ethical issues associated with AI and proper governance. Bias, data management, model maintenance, and explainability are crucial aspects of an AI governance framework. Environmental, Social and Corporate Governance (ESG), a way of measuring an organization’s ethical properties, is also growing in popularity within financial services and is a crucial element of ethical AI.
What’s next for AI in financial services?
The future is looking bright for AI. Hiring more AI experts, providing AI training to staff, engaging with third-party partners to accelerate AI adoption, investing more in AI infrastructure, and identifying additional AI use cases are in the works for at least 30 percent of respondents. And the expected outcome is clear, with 37 percent believing that AI will become a source of competitive advantage for their organization.
According to the survey findings, there are many use cases, all of which are growing tremendously year on year. Organizations are aligned on their challenges and committed to investing in their AI strategy to achieve greater customer satisfaction, lower operating costs, higher revenues, and an overall competitive advantage.
