IBSi Blogs

Over the course of time, supply chains have evolved and become ever more complex and multifaceted. Where once they were local, or domestic, supply chains are now global. Whilst this drives down per unit costing through comparative advantage, it does mean that businesses need entire departments to source high-quality components for onward processing and distribution. They must also work to maintain positive relationships with suppliers during the procurement and supply chain process.

by Alistair Baxter, Head of Accounts Receivables Finance, Taulia

The changing dynamics of the world around us, whether that be economic or political, mean that we often see a play-off between market protectionism and free trade economics. Events of the last few years combined with various trade measures have significantly disrupted, and ultimately changed forever, global supply chains.

We have observed an increase in global disruptions to supply chains in recent years, particularly during the Covid-19 pandemic – and the impact of that disruption cannot be overstated. Increased shipping costs are now the norm and supply chains are being remapped by companies to try and gain an advantage over competing supply chains. This was brought to the mainstream attention when one of the world’s largest container ships, the Ever Given, whose onboard goods totalled $775 million, blocked the Suez Canal for 6 days in 2021. This form of trade friction has created disruption which negatively impacted businesses and economies and while Ever Given was a first, it may seem obvious to say that it might not be the last and businesses need to be prepared.

Resilience is now a key challenge for those responsible for sourcing and securing strong supply chains. Technology has a massive role to play in supporting this and alleviating some of the current complex challenges. Technology can paint a clear picture of where the disruptions are, or even better, predict where they might happen further down the line, beyond the current field of vision. Continued adoption of technology will dynamically allow information to flow down to suppliers – otherwise known as ‘purchase order cascades’ – to increase transparency for even the smallest suppliers.

The world of supply chains has an opportunity to lead the way in ESG by increasing communication and transparency. Technology is again the enabler, allowing for the tracking and rewarding of supplier ESG performance. It is imperative that those at the very top of the supply chain set the ESG tone and support the raising of standards throughout their supply chains. Working together will improve the supply chain ecosystem for the long-term.

Supply chain managers have a significant role to play in the reshaping of industry. In response to the purchasing habits of consumers in developed markets, it’s the best value chain that wins, as opposed to the best product or retailer, as customers come to expect prompt delivery of goods, or ESG credentials to be made clear at point of purchase. Amazon, as an example, has one of the best value chains: logistics, ease of access, and customer touch points are all carefully considered and planned. Amazon has been acquiring its own shipping containers since 2018 and chartering its own ships to avoid major bottlenecks in its supply chains and to get products onto e-shelves.

Technology has been developed to respond to this shift in behaviour and as hyper-personalisation and emotion-led experiences begin to dominate how we work and live, supply chain managers will have to find different ways to respond.

With change being the only constant, those enabling the building and continuity of supply chains are playing a vital role in reshaping industry and to best position themselves for what is coming down the tracks. Harnessing the technology at their disposal to predict and prevent the obstacles that may materialise will help them to drive success.

There’s little denying we’ve entered the age of crypto. Last year, practically every crypto wallet saw its user figures increase, with Blockchain.com wallets – the site that makes it possible to buy bitcoin – boasting more than 81 million wallet users as of February 2022. And considering the array of multi-million-dollar adverts for crypto apps/currencies shown at this year’s Superbowl, it’s fair to say that cryptocurrency has well and truly entered the mainstream.

by Amir Nooriala, Chief Commercial Officer, Callsign

And with more people interested in digital assets, many financial institutions are rushing to create their own decentralized platforms (DeFi) to cash in on the hype.

However, this growing popularity is also fueling another boom – a boom in fraud. In 2021 alone, crypto scammers stole a record $14 billion, a staggering rise of almost 80% over 2020. And while scamming was the most popular form of crypto-related crime, theft via hacking was a close second – and not just from individuals.

For instance, there were more than 20 occasions last year when a single criminal entity hacked into a crypto exchange or project, making off with a total of at least $10 million. And there were at least six occasions last year when hackers managed to steal more than $100 million from an exchange.

The lucrative nature of digital assets has made them one of the most desirable targets for modern criminals. Yet, despite the enormous sums of money at stake, without fundamental changes to how these crypto exchanges operate – and more specifically, authenticate users – this situation is only going to get worse.

Understanding the crypto ‘Wild West’

The nature of cryptocurrency has always been antithetical to how most financial services institutions work. Blockchain technology is a dynamic, decentralized innovation, so developing the controls and frameworks to better manage it has always been a daunting task for financial services businesses, governments, and regulators (which is why many banks are still resistant to it).

And despite the public’s growing interest in crypto, many still struggle to understand the basics of how a blockchain works – they simply know it may make them rich. That confluence of poor understanding and high desirability is also why crimes – such as the One Coin cryptocurrency scam – can happen.

Detailed in the book (and podcast) The Missing Cryptoqueen, millions of people paid billion dollars for a cryptocurrency called One Coin – even though it was never really a cryptocurrency or even on a blockchain.

The leader of the company/scam, Dr Ruja Ignatova, used the confidence and excitement in cryptocurrency – along with the general lack of true understanding as to how the technology works – to prey on people all around the world looking for their own crypto success story.

However, when it comes to crypto crime, there are much simpler ways of pilfering incredible wealth without the hassle of leading a fake financial revolution. That’s because there are mechanisms enabling most of these crimes to happen, and the fault very much lies with most exchanges themselves – not individuals.

Fighting modern threats with archaic weapons

Despite the futuristic nature of crypto, criminals haven’t had to reinvent the wheel to gain access to wallets and exchanges. Because many methods of attack being leveraged by most criminals are scams that traditional financial institutions have long been aware of, such as Remote Access Trojans (RATs) and Account Takeover Fraud (ATO).

However, the problem is that crypto exchanges haven’t learnt from these techniques that fraudsters have been deploying for many years. Instead, they are deploying controls banks stopped using 10 years ago. While these controls would be fine to protect social media accounts, they are no longer enough to protect your cryptocurrencies which are now incredibly valuable.

In addition, crypto exchanges aren’t bound by the same stringent rules and regulations other financial institutions – such as banks – are. For instance, in comparison to the billions mentioned above that have been scammed from exchanges in recent months, the £1.3 billion lost by banking customers to fraudsters in 2020 is but a drop in the bucket. And that’s despite the uptick in fraud due to Covid-19.

One way crypto exchanges are particularly letting their users down is in how they conduct authentication. When these businesses want to authenticate a user’s ID, the tendency is still to use passwords and usernames, reinforced by “possession factors” – such as an OTP (one-time-password) sent via SMS message to users’ phone.

On the surface, OTPs seem like a reasonably secure method of authentication, but SIM cards were never designed for security which is why many banks have moved away from authenticating customers with them. So, credit stuffing, SIM swapping and SS7 attacks, passwords, usernames and OTPs all present fraudsters with very convenient workarounds for all the subsequent layers of security these platforms have.

But even though these are old vulnerabilities being exploited, that doesn’t mean cybercriminals are resting on their laurels – scams are getting larger and more devastating every year.

RATs for instance – whereby scammers use malware to remotely control infected computers and send/receive data from the system – are increasingly being substituted with its mobile equivalent, MRATS, to gain access to devices.

Used in tandem with other forms of attack such as credit stuffing, has proven to be incredibly effective for criminals. For instance, an ATO attack is when fraudsters use stolen credentials to try and gain access to genuine accounts, often leveraging automated tools to “credit stuff” at an astounding rate. One fraud prevention platform estimated that incidences of ATO grew a staggering 307% over just the last two years.

Simply put, it’s time for this new wave of financial institutions to stop the fraudulent activity taking place in the crypto sector under their watch. And the only way to achieve that is to uproot the broken foundation of authentication that’s currently letting its users down, in lieu of a modern solution better fitted to our digital world.

The age of biometrics

Despite the many makeovers usernames and passwords may have undergone, they’re still analogue solutions that are merely being used in a digitized context. As such, the entire notion of digital identity is built on a fundamentally broken system not built for a truly digital world.

Biometrics, on the other hand, presents a truly digital solution capable of keeping up with our dynamic world. Unlike a username or password which can be intercepted or compromised, behavioural biometrics, such as Callsign’s platform can be finetuned to individuals. It can consider everything from how a device is being held, the speed and style of keystrokes, and numerous other idiosyncrasies that are impossible to mimic.

Behavioural biometrics give businesses a method of authentication that requires no additional hardware on the part of the user (device agnostic) and doesn’t impact the user experience in any way. All while learning and adapting over time as that user’s relationship with the business evolves.

So, as crypto fraud shows no sign of slowing down, it’s now incumbent on these exchanges to interrogate the ways they authenticate users and ask themselves if their security policies are in fact putting their customers at risk. Because the sooner they can start fixing digital identities in a meaningful way, the better.

With so much data locked in unstructured formats, such as PDFs, invoices and emails, discovering information to either prove compliance or non-compliance at scale is becoming increasingly difficult. Remaining compliant is a mission critical consideration for organisations operating within regulated industries. For regulators, it’s also vital that processes are strictly followed, and that non-compliance is identified as soon as possible. On both sides of the regulatory fence, having access to the right information as and when it is needed is key.

by Ryan Moore, Head of Data and Analytics at Aiimi

To overcome the challenges of managing information across systems, organisations are increasingly adopting insight engines to intelligently identify and surface all relevant information. By leveraging this capability, both the regulated and the regulators are able to streamline regulatory compliance processes.

Organisations operating within heavily regulated industries, such as financial services, will typically hold vast amounts of historical data and information that will fall within the scope of regulatory audits. The key challenge here is that much of this information is contained within unstructured and semi-structured documents that are hidden within multiple systems, presenting significant challenges when it comes to discoverability and disclosure.

Organisations should, of course, be fully aware of the regulatory compliance frameworks that govern their usage and management of data. These frameworks are usually transferred into business rules that dictate the processes by which documents and data are shared, stored and managed—for example data classification and security and access controls. This is best practice, but it’s often only when audits are conducted that organisations discover how stringently business rules have been followed. Add to this problem the likelihood that data regulations will have been updated or superseded by new regulations over a number of years, and that the personnel responsible for creating business rules may have left the organisation, and the compliance challenge becomes clear.

With essential pieces of information missing, producing compliance reports requires a significant amount of manual intervention, which is both costly and time-consuming; the average cost of compiling a DSAR (data subject access request) response, for example, is £6,000. In short, business rules can only take the organisation so far when it lacks the capability to intelligently search, discover and classify structured and unstructured data.

This is where insight engines can deliver significant benefits and move organisations towards an advanced compliance model that allows regulatory reports to be compiled and delivered with confidence.

Enriching and evolving with deeper insights

By crawling through systems and identifying relevant information that lies within unstructured documents, insight engines eliminate compliance risks by interconnecting and enriching all data across the enterprise. This allows the organisation to quickly determine the information assets that conform to business rules—i.e. regulatory frameworks—and those that do not. The latter can then be audited and classified through further enrichment steps, such as named-entity recognition, which identifies terms or phrases within unstructured documents, and assigning labels to them.

Not only does this build in an advanced level of intelligence and automation when it comes to compliance, it also brings agility to governance and compliance, as organisations can adapt to regulatory changes with ease by adapting or implementing new business rules. Without an insight engine to surface the information that relates to new regulations, this would not be possible.

Predictive compliance

Another benefit of adopting insight engines is that they prepare organisations for more advanced information management capabilities. For example, organisations can take advantage of the classification and labelling function of insight engines and enable new documents and data to be automatically assessed for compliance. Machine learning can also be used to predict potential risks, providing advanced alerting capabilities taking us one step closer to automating compliance.

This is useful for both the regulators and the regulated. For regulators, alerts can be created when organisations exhibit risk. An example might be an alert that flags the creation of a new company that has the same postcode or founder as an organisation that has previously been closed down for serious regulatory breaches.

For regulated organisations, advanced alerting and risk scoring can provide a fast route to remediation when non-compliant documentation and data is introduced to systems. Further to this advanced redaction technology can also be used to eliminate risks associated with sharing larger data sets, allowing only the relevant information to be disclosed.

The right information at the right time

Key to automating the regulatory process for both the regulated and regulators is the ability to discover and order data. Insight engines bring more information to a visible state, meaning the landscape of information is richer and more detailed. This means reports are more accurate and organisations more compliant. The potential for advanced analytics is also unlocked once all information is made discoverable.

With regulators increasingly able to identify compliance risk with insight engines, it is incumbent upon the regulated to stay ahead by adopting similar technology. Insight engines make information readily discoverable at the right time, allowing both sides to ensure regulatory processes are more efficient, accurate and cost effective.

In an era of fintech innovation, banking outside of a bank branch is now the widespread norm, as we have all become accustomed to accessing and managing our finances with the press of a few buttons. Through embedded finance, we’ve seen fintech influence our lives even further in recent years, enabling non-financial providers to seamlessly embed financial products into their customer journeys.

by Karan Shanmugarajah, CEO, WealthKernel 

However, the success of embedded finance is now highlighting an untapped opportunity – embedded wealth. Just as embedded finance has enabled customers to access payment, lending and insurance products from non-traditional providers, embedded wealth will see businesses integrating wealth and investment services for their customers. With the technology for embedded wealth now readily available, it might not be long before you can buy stocks and shares alongside your meal deal of crisps, a sandwich and a drink.

The rise of embedded finance

If you are reading this article on a smartphone, there is a good chance that the next app you open uses embedded finance. Everything from the ride-hailing app Uber to the food delivery service Deliveroo, is now integrating financial solutions to give customers more convenient payment options. This opportunity offered by embedded finance has seen widespread adoption, with research from Juniper projecting a value of $138 billion in 2026, a dramatic increase of $95 billion from 2021 (Juniper, 2021).

What makes embedded finance so appealing for businesses are the low costs and easy integration compared to traditional bank offerings. All processes relating to money management from digital wallets like Apple Pay to the over $4.07 billion BNPL industry (Grandview Research, 2021) fall under this remit of financial products offered under embedded finance. There are other benefits beyond cost to integrating financial products into a business’ offering – allowing for monetisation based on their established brand. By integrating these third party financial services, businesses can gain increased insight into customer spending and allow for a data-driven approach to further improve customer experience. Due to the relatively low costs, companies can also experiment with a broader offering without compromising heavily on revenue or reputation; for instance, Uber was able to quickly de-prioritise its financial service Uber money, a digital wallet allowing drivers instant payments.

By embedding finance, customers can also pay or access a financial product instantly without searching for their physical credit or debit cards. Popular coffee brands such as Costa and Starbucks now even offer embedded payments through their apps, letting customers pick up reward points or pay through the company app. Customers can also top up this card using Apple and GooglePay.

The market opportunity for embedded wealth

Embedded wealth is essentially an extension of embedded finance – offering regulated wealth and investment products from a non-wealth body, typically via API. This could see customers invest, trade, and access various wealth products beyond payment and lending services.

Embedded finance has already added tremendous value to the customer journey. The blueprints of this, applied to wealth and investment, could make investing and saving more attainable for a wide array of consumers. For a business already offering its customers payments and lending services, wealth and investment could be a natural progression to improve experiences. Typically ‘wealth management’ brings to mind a service offered to individuals with significant amounts of cash or assets to invest. However, embedded wealth could see investment products offered to customers with even smaller amounts to invest or grow or to those who may have not even considered investing previously. There is a real opportunity to broaden access to investing through embedded wealth as customers become more accustomed to utilising financial products offered by familiar brands. With API-enabled wealth technology now readily available, it can be offered at a lower, more-accessible cost for many.

For consumers experiencing significant life changes- whether purchasing a home or planning retirement – a familiar brand integrating wealth management offerings could help provide security and confidence. This has become particularly relevant since the pandemic, where trust in financial services has shifted drastically, with fintechs surpassing banks in levels of trust, according to Mckinsey (2021).

We should also consider customer loyalty to everyday brands like supermarkets or retailers where embedded wealth could provide value. A recent study conducted by Solarisbank revealed that 61 per cent of respondents indicated a willingness to use financial products from trusted brands such as Amazon, Lidl and IKEA (Solarisbank, 2021).

Embedded wealth could help onboard customers who may not have previously considered investing with a financial institution, but are open to the idea of it with a business they are loyal to. A well-placed wealth offering could allow for longer-term customer relationships, as customers would see this business as not only a provider of their favourite products but also as a place to grow and invest their money.

Adding embedded wealth to your shopping list

So with the potential of embedded wealth on the horizon, could our new supermarket list of milk, eggs, bread… include stocks and shares? With technology now making the possibilities for embedded wealth potentially endless, it wouldn’t be surprising if we soon see this scenario become a reality.

Retailers are already recognising the potential of integrating financial products into their platforms, so wealth products could be a logical next step. Walmart, for example, recently announced its transition into the fintech space by partnering with fintech investment firm Ribbit Capital to provide its customers with tech-driven financial solutions (Business Wire, 2021).

For supermarkets already providing banking and savings products, or even credit cards, an investment portfolio may even already be on the to-do list – helping customers with money already saved with them to grow their finances even further. Additionally, most supermarkets today also offer loyalty or point schemes, allowing customers to save up points and spend them in-store. Could a potential entry-level embedded investment product see customers invest these points to grow their money in-store?

And so, as the appetite for wealth, investment and trading services has seen widespread growth across fintech in recent years – investment portfolios developed by retailers and supermarket chains could be on the horizon. With a recent OpenPayd study revealing that 70 per cent of brands are expected to launch embedded finance offerings (OpenPayd, 2021), it might not be long before we see a level of usage of embedded wealth by notable brands.

As the conflict between Russia and Ukraine continues and no sign of resolution in near sight, the broader secondary implications are being felt far beyond the region’s borders. Amongst them are serious cyber implications that could have devastating and far-reaching consequences – not just for countries directly involved in or close to the conflict, but the global financial system.

by Guy Warren, CEO, ITRS Group

In particular, institutions critical to the infrastructure and running of their country are probably the most vulnerable. And when it comes to these criteria, financial institutions are at the top of the list. As such, it is critical for banks and other financial institutions to assess, thoroughly and quickly, their vulnerability to such attacks.

A global problem

Though some in the west might believe that the Russia-Ukraine crisis isn’t their problem, recent history indicates otherwise. NotPetya – a Russian-organised cyberattack targeting Ukrainian power, transportation, and financial systems – was less than five years ago. And while its intention was to destabilise Ukraine, NotPetya spread rapidly.

The consequences of the attack included massive operational disruption to countries across the globe – including the US, UK, France, Germany and India, with ripple effects hitting almost every corner of the global economy. The consequences were disastrous – with the White House estimating that the total worldwide cost of the attack exceeded $10 billion.

Now, both the threat and potential impact of a cyberattack are even higher. The US Cybersecurity and Infrastructure Security Agency (CISA) recently issued a warning of the risk of Russian cyberattacks spilling over onto US networks, which follows previous CISA warnings on the risks posed by Russian cyberattacks on US critical infrastructure. And the European Central Bank (ECB) has warned European financial institutions of the risk of retaliatory Russian cyber-attacks in the event of sanctions and related market disruptions.

Clearly, countries across the globe are anticipating the possibility of their critical financial infrastructures getting caught in the cyber-crossfire of the conflict. But what can they do to protect themselves?

Ultimately, this requires a two-phased approach: understanding the risk, and then putting measures in place to mitigate and minimise the impact, should they experience a cyberattack.

Understanding the risk

Firms have no hope of protecting themselves against cyberattacks unless they have a comprehensive understanding of the range of attacks that they can be subjected to.

And there are many forms of cyberattacks that banks are vulnerable to. There are attempts to crash a website (DDOS); hacking to penetrate the network; Trojan horse with software running inside the firewalls reaching out to the criminals; spam and attempts to fool someone to let them in; virus payloads that can encrypt the computers; and these are just a few.

When it comes to the impact, this can vary – from bringing down a critical service to stealing data, to ransom to de-encrypt, etc. However, because of the intertwined nature of the financial services industry, if one part is hacked, it can have ripple effects on other parts. For example, if payment processors were victims of a cyberattack, stock exchange transactions would be impacted.

Damage mitigation and control

While these techniques are known and understood, it is significantly harder to ensure that all means of access are not vulnerable – particularly as banks’ infrastructures are more complex than ever, and, for many traditional players, suffer from significant siloes.

Fortunately, there are techniques to prevent each form of cyberattack – but preparation is key. Firms must consider not only their ability but the ability of their third-party providers, to withstand cyberattacks.

Another effective tactic is raising staff awareness – including re-running staff ethical phishing campaigns and holding drills to ensure your firm is prepared. For example, in November 2021, the Securities Industry and Financial Markets Association, a trade association, led a global ransomware drill to practice fighting against such attacks, which over 240 public and private sector institutions, including financial firms and central banks. And banks often allocate significant budgets towards cybersecurity – Bank of America, for example, spends $1 billion annually on its cybersecurity efforts.

However, in a large, complex IT estate with many staff, as is the case for many banks, it is very difficult to prevent all techniques all the time. Teams looking at cybersecurity, geopolitical risk, and physical security should be working closely together, not in silos – and it’s far better to build communication and cooperation before disaster strikes, rather than in the face of a crisis.

Regulators around the world have increased focus on this of late – such as by introducing new Operational Resilience regulations (DORA in the EU for example). And the FCA recommends that firms report material operational incidents to them in a timely way in order to ensure that they can provide specialist expertise and work to minimise harm to consumers, markets and the wider UK financial sector.

Ultimately, totally escaping such consequences of the crisis is impossible. Cyberattacks remain a key risk, and a cyber or IT problem quickly becomes a business problem – so ensuring that you have measures in place to mitigate and protect against a worst-case scenario is crucial – not just for the firm itself, but when it comes to financial services, the stability of the entire country.

Over the past few weeks, we’re all likely to have gone through extra rounds of verification when conducting activities online, particularly when buying goods or services.

by Bala Kumar, Chief Product Officer, Jumio

This is thanks to the recently introduced Strong Customer Authentication (SCA), which means additional security measures are now part and parcel of making online payments. With the UK losing £2.5bn to fraud and cybercrime in 2021, SCA has a clear place, aiming to verify a user’s identity through multi-factor authentication (MFA) methods – such as a one-time password received by text or phone call – to authorise online purchases.

Though SCA requirements will no doubt help mitigate the risk of online fraud, businesses must consider the impact of these measures on user experience. From a convenience point of view, these additional measures, though necessary, create barriers when it comes to making online purchases seamless and efficient. What it does do, though, is force focus on how businesses can better verify customers – in all online instances, not just those governed by SCA – and whether outdated password-based verification methods, for example, really have a place today. SCA is clearly another factor that makes the case for the potential of biometrics, particularly in higher-value scenarios, whereby businesses can remain customer-centric and bridge the gap between security, compliance and customer experience.

From the old to the new

In Q4 of 2021, roughly 80% of orders on mobile devices in the UK were incomplete. During the same period, over seven in 10 online carts created were abandoned. Clearly, inconvenient checkout processes can have a damaging impact on whether customers engage with online brands. For online businesses, user experience is undoubtedly important, and when it comes to identity verification, ensuring a seamless and secure process can go a long way.

In fact, 93% of consumers prefer biometrics over passwords for validating payments. By leveraging biometrics for identity proofing and user authentication, businesses can effectively establish a customer’s identity and provide a seamless user experience.

Convenience and security are the lock and key

Biometric-based authentication delivers a simple, intuitive user experience for legitimate customers and simultaneously thwarts and deters cybercriminals because of the high assurance of the biometric captured upfront and on an ongoing basis.

Research predicts that mobile biometrics will be used to authenticate transactions worth $2 trillion by 2023, compared to $124 billion in 2018. In the same way that biometrics have clearly transformed the mobile space, it’s also rapidly taking hold of the payments world. Payment providers that allow online businesses to implement biometric methods at the verification stage can reap the benefits of greater security for themselves, customers, and businesses thanks to the uniqueness of everyone’s biometric features. And, as consumers become increasingly accustomed to using biometric data to identify themselves in their daily lives, businesses that offer this option to their customers will stand out as innovators, while also benefiting from reduced costs and enhanced security.

Bridging the gap between security, SCA compliance and customer experience

As expected with digital transformation, we saw an increase in fraudulent transactions in these faceless channels. Even with post-pandemic recovery, we expect the digital shift to continue. Businesses must address the transformation drivers and potential ongoing threats to ensure customer retention.

Biometrics can significantly enhance security measures, especially in mobile payments, without adding unnecessary friction to the process. For example, coupling facial recognition with liveness detection can not only prevent spoofing attacks but is also a secure and convenient way for users to verify their identity. Going one step further by adding an independent, app-based biometric allows easy two-factor authentication, whilst simultaneously ensuring users continue having access to their accounts – even if they lose or switch their device.

In the face of SCA, payments providers and online merchants alike must look to harness the power of face-based biometrics for identity verification and authentication to successfully bridge the gap between security, SCA compliance and customer experience.

Do you remember your first discussion with an adult about money? Do you believe that it was too late in life? Would your life have been different if someone discussed money with you earlier in life? If the answer is yes, imagine the life of a child of this generation. They are exposed to concepts like NFT, Bitcoin, Shark Tank, Funding and a lot more without knowing even the basics of money.

by Payal Jain, Founder, Funngro

A recent study found that more than 70% of Indian households don’t understand basic financial concepts, despite being exposed to financial products throughout their lives. According to National Centre for Financial Education, just 27% of Indians are financially educated and India has the lowest financial literacy among the BRICS countries. Moreover, according to a global survey of 20 countries by the Organization for Economic Co-operation and Development, 1 in 4 kids are unable to make even simple decisions about everyday spendings, such as understanding a bank statement or choosing a phone plan.

The democratisation of financial services is fast altering how people perceive and manage their finance and thus financial inclusion should not be viewed as a goal in and of itself. Financial education is becoming increasingly important as financial solutions become more widely available. The necessity for financial education begins at a young age with children as early as ten years old who may comprehend the fundamental concept of money, and by the time they become adults, their financial habits have already been established.

Most parents offer their children a piggy bank in which they can store their spare change, birthday money, or monetary presents from relatives/families. This notion aids them in maintaining a saving discipline. However, financial markets are complicated and go much beyond the idea of merely saving.

Growing contribution of FinTech applications

Fintech apps are addressing the gap by giving students targeted resources to learn about personal finance. A fintech app that could provide students with an introductory crash course on everything from saving, investments, debt, and student loans to personal finance fundamentals would be a valuable addition to schools’ financial education curriculum.

Fintech apps take some of the pressure off teachers by giving students resources to learn on their own.

Technology changing the connotations of monotony

Applications like Funngro make learning easy and fun, which helps kids be more engaged in learning about personal finance. Many fintech companies are increasingly employing technology to devise novel solutions to challenging money problems in order to relieve the strain on parents and children. The use of technology to make the planning process more enjoyable and simple is progressively changing the paradigm. Fintech applications for kids not only teach them valuable financial concepts like saving, investing, and compound interest rates, but they also help them keep track of their money and expenses by establishing limits and goals.

With roughly 41% of the country’s population under the age of 18, this new and enormous market has a lot of untapped potential and is quickly becoming a crucial focus area. It is important to teach kids about money at an early age. But we all know that kids are often more interested in playing with their friends, or on their phones than sitting down and learning about personal finance. That’s where apps come in. These apps make learning easy and fun, which helps kids be more engaged in learning about personal finance. It is never too late to start teaching your kids the importance of saving and investing their money, and they will thank you later. Incentivizing financial education from an early age will empower the children towards a financially resilient future.

When youngsters understand the idea, they may influence their families by sharing information about the value of saving and taking the actions necessary to properly manage their money. As a result, promoting financial literacy and raising financial awareness among youngsters may be quite beneficial.

Supported by a payments ecosystem that becomes increasingly more sophisticated each day, and driven by accelerated digital transformations following the pandemic, the payment methods consumers have at their disposal today are myriad. Not only are Alternative Payment Methods (APMs) proliferating across the globe, they are already dominating cards in some countries and consumers are developing specific preferences according to region or country.

by Kristian Gjerding, CEO, CellPoint Digital

Armed with and accustomed to this array of APMs, consumers can spend their money in multiple, digital-first ways almost anywhere in the world from card or cash-based wallets to mobile payments, to paying by instalments.

Merchants who are unable to accept these APMs risk creating customer friction points that interfere with their growth ambitions and prevent them from scaling their businesses to serve a global customer base.

The rise and rise of APMs

Consumer adoption of APMs is growing exponentially and was believed to account for over half of all global e-commerce payments in 2019 – the last year for which results are available. At a more regional level, it is reported that in Europe, upon reaching the Point of Sale (POS), 80% of consumers have an expectation to pay for their goods and services with a digital payment method rather than a typical debit or credit card.

Meanwhile, across the Asia-Pacific (APAC) region, nearly all consumers (94%) report that they would consider using an APM in 2022 and within the Middle East and North Africa (MENA) experts are saying digital wallets are set to be the region’s preferred means of making payments. Owed largely to the pandemic and the necessity for online, digital, and contactless payments, Latin America is also catching up with 55% of the population now banked and the use of APMs on a steady increase.

As we can see, consumers are shifting towards APMs in ever-increasing numbers. For merchants with cross-border growth ambitions, it means that developing an APM strategy is now crucial for penetrating global markets and driving revenues.

Tackling cart abandonment

‘Cart abandonment’ is an inevitable bugbear for online merchants with 70% of shoppers deserting their virtual trolley at the point payment is requested.

As an increasing number of merchants with ambitions of international growth are experiencing, an inability to accept a customers’ preferred payment method is one of the more reliable ways to kill a conversion. Indeed, a recent study in the US found that 42% of American consumers will bring a purchase to a halt if their favourite payment method isn’t available.

The problem for merchants is, with all these different payment methods, some more popular in specific regions than others, and with a gauntlet of contrasting international regulations to navigate, implementing and managing all these methods can be incredibly difficult.

It is partly because of their ability to confront this friction that payment orchestration platforms are growing in prevalence.

Enter the payments orchestration provider

According to PYMNTs, the global market for payment orchestration platforms is also expected to grow 20% every year between 2021 and 2026. With each new merchant implementing the technology, consumers across the globe have a new place to spend their money in whichever way suits them best.

The platforms provide merchants with a single interface through which all transactions between themselves, their customers, and their payment providers are initiated, directed, and validated. The agility this confers to merchants who would otherwise need to manually integrate new APM options – resulting in protracted time-to-market and decreased competitiveness – is considerable.

Moreover, the complexity of monitoring the performance of multiple, manually integrated, and siloed payment methods would add to these obstacles and delays. Here, payment orchestration intercepts by automatically aggregating and processing these crucial data streams and providing merchants with valuable, real-time analytics that save time, prevent human error, and aid decision making.

This speed to market coupled with comprehensive real-time reporting allows merchants to begin increasing revenues in the short-term and make better decisions to facilitate growth in the long-term. However, the opportunities to enhance cash flows don’t stop there.

When a merchant relies on a single acquirer/PSP it is they who have ultimate control over transaction flows. For example, if the PSP succumbs to an outage, the merchant is subsequently and directly impacted. Likewise, if the PSP routes transactions to a specific acquirer, the merchant can do little if the costs they incur from this acquirer are unfavourable to them. A payment orchestration provider redresses this imbalance by transferring control of the transaction flow back to the merchant by allowing them to create real-time rules for switching transactions and offering APMs to consumers. This dynamic routing improves the success of processing rates, gives customers more payment options, and means failed transactions can be re-routed to the next acquirer leading to fewer lost sales.

Collectively, these various payment orchestration features and functionalities both unleash the potential of APMs and provide merchants with the speed and flexibility to drive revenues to ambition-exceeding levels.

Partnership with payment orchestration platform provider is key

By plugging directly into existing core or eCommerce systems, payment orchestration platform providers allow merchants to go straight to market with a growing payment ecosystem where the best-suited partners are easily picked and added. With their online checkouts optimised to accept a full suite of APMs, opportunities for growth quickly begin to multiply.

Merchants can display their products or services across multiple digital channels knowing that consumers can pay using whichever APM they prefer. This reduces cart abandonment rates and allows merchants to target specific regions by demonstrating their ability to accept the most popular APMs consumers in that region use.

Payment orchestration enabled APMs to add agility and dynamism to today’s merchants that allow them – for the first time – to give consumers whatever payment method they want, wherever they are. As the adoption of APMs continues its steep upwards trend, this capability will only become more essential for merchants looking to thrive on a global scale.

Of all the FinTech and banking trends of the past few years, the story of Buy Now, Pay Later (BNPL) stands out as one of the most prominent and memorable. During a period of tumult and uncertainty, BNPL seemed to go from strength to strength, growing exponentially in scale and popularity and swiftly being incorporated into the offerings of some of the world’s largest and most influential companies.

by Ion Fratiloiu, Head of Commercial, Yobota

Breaking financing down into multiple fixed repayments has allowed consumers to increase their short-term spending power, which can be a tremendous advantage to those with regular income that lack saved capital. The benefits aren’t limited to the user, of course. Retailers are reaping the rewards of this heightened spending power, while BNPL providers have grown in tandem with the product’s popularity.

BNPL is not a license to spend with abandon – it is ultimately a credit product, and its misuse can have adverse effects on the consumer’s credit rating and financial wellbeing if repayments are missed. It is a tool that has the power to help consumers reach their immediate goals, but one that must be treated with care and caution.

With Which? estimating in July 2021 that a third of UK consumers reported having used a BNPL product at least once, this convenient lending system has clearly landed in the business to consumer (B2C) sector with aplomb, changing expectations and best practices for lenders and retailers alike. This sea-change, however, is not limited exclusively to B2C – the next destination of the Buy Now, Pay Later revolution is in fact other businesses.

Back to B2B

The next giant leap for BNPL might stem from its usefulness to startups and small-to-medium enterprises (SMEs). Liquidity and financing are common obstacles for businesses in their early stages, and while specialist services do exist to cater to these issues, BNPL can provide a greater degree of control, flexibility and transparency that could prove invaluable to businesses that are in the process of levelling up.

Support for SMEs and startups comes in many forms, but overreliance on incubators and seed funding can stunt the overall development of the sector. Sometimes, businesses need to be able to manage their own finances at speed, needing short-term injections rather than waiting for their next seed round. Traditional lending options are available, and have existed for years, but can be slow to secure and be laden with complex terms and conditions.

This is what makes BNPL for Business such a tempting proposition. The ability to spread repayment for specific purchases over an agreed period suits businesses with predictable revenues but little capital – like a subscription-based startup or a growing company still awaiting funding. BNPL can make borrowing frictionless and consistent in a way existing options cannot.

This isn’t only good news for small businesses – growth in the BNPL for the Business sector could fuel the same growth that B2C did, with all parties involved able to benefit. We could see SMEs experiencing improved cash flow management and spending power, and specialised B2B BNPL providers expanding with the same speed as their B2C counterparts.

Power to pay your own way

The driving force behind the rate of change within BNPL is the strength of modern core banking. Banking as a Service (BaaS) has simplified the process of setting up seamless and scalable lending and payment solutions to the point that any business can create their own financial products with ease. This means that not only can more businesses offer SMEs lending options, but more SMEs can create their own BNPLs and offer split payments through their own platforms.

In the UK alone, BNPL usage almost quadrupled in 2020, totalling an astounding £2.6b in transactions – this sort of opportunity should not be exclusive to major brands and eCommerce retailers. Whether using the services themselves or offering them to their users, SMEs should consider adopting BNPL as part of their approach if they want to stay ahead of the curve.

The year of BPNL for small business

While the world’s largest companies like Amazon and Apple have already embraced BNPL, enjoying banner years of their own, the success of new businesses is a more encouraging metric of our economy rebuilding. Seeing more SMEs and startups turn to Buy Now, Pay Later could be an indication of better things to come, and of different industries and sectors beginning to get back on their feet.

2022 is a year for optimism, for looking forward and having confidence in better things ahead. BNPL is one area with the potential for success, and the opportunity at hand is there for the taking. All small businesses need to do is embrace it for themselves.

 

From launching his financial career at Deutsche Bank, Ion spent a number of years consulting in the equity capital markets space and leading sales growth for FTSE500 company Fiserv and core banking provider Thought Machine. He joined Yobota in 2021 to launch its commercial operation, leading GTM strategy and building a diverse and multi-faceted team to take the company to the next stage of growth.