IBSi Blogs

As cryptocurrencies become ever more mainstream, blue-chip names are anxious not to be left behind in the crypto stampede. With Goldman Sachs predicting that bitcoin will increasingly compete with gold as a store of value, banks and major corporates are eagerly seeking to extend their crypto footprint.

by Manoj Mistry, Managing Director, IBOS Association

The most recent big name to join them is the Canadian arm of KPMG, which recently announced that it had added ethereum (ETH) and bitcoin (BTC) to its balance sheet, making it the first of the Big Four to invest in decentralised digital currencies.

By doing so, the accounting giant has joined legions of crypto investors worldwide. According to Statista, the global number of Blockchain wallet users has already surpassed 81 million with some analysts estimating that the total figure now exceeds 200 million. Figures published by the Financial Conduct Authority (FCA) estimate that there are around 2.5 million cryptocurrency owners in the UK.

KPMG’s strategic decision can be interpreted as a reflection of the market’s direction of travel: an explosion of investor interest in crypto and increasing participation in other blockchain technologies, such as NFTs (non-fungible tokens) and decentralised finance (DeFi) technology, that has simply become too big to ignore.

The managing partner at KPMG’s Canada office, Benjie Thomas, was distinctly upbeat when he announced the move. “This investment reflects our belief that institutional adoption of cryptoassets and blockchain technology will continue to grow and become a regular part of the asset mix,” he said.

A few weeks later, KPMG Canada went further: buying a World of Women NFT (Woman #2681) for a reported 25 ETH (US$73,000), acquiring an Ethereum Name Service domain name – a tool that makes cryptocurrency addresses more user-friendly – and minting kpmgca.eth.

KPMG is not alone. Many banks have also recognised cryptocurrencies as a maturing asset class: 55 per cent of the world’s 100 biggest banks by assets under management are now investing directly or indirectly in companies and projects related to cryptocurrencies and blockchain, according to Blockdata.

In allocating bitcoin and ethereum to its corporate treasury, KPMG also follows in the footsteps of major companies such as MicroStrategy, Square and Tesla, which are now holding crypto on their balance sheets. Tesla’s CEO Elon Musk has been a keen advocate of crypto, having publicly stated that his personal portfolio includes bitcoin, ethereum and dogecoin. Meanwhile, Tesla’s most recent accounts reveal that the company held almost $2 billion worth of Bitcoin holdings last year.

The absence of specific regulation is arguably part of crypto’s appeal. But as the combined market value of all cryptocurrencies breached the $2 trillion mark in 2021, financial markets and investors knew that key global regulators were set to respond to what they perceived as high levels of risk.

UK regulators have set the rhetorical pace. The FCA and the Bank of England have both cautioned investors in uncharacteristically strong language to help them appreciate the risks: fraud, hacking, money laundering, sanctions risks, as well as general market and credit risks.

In the US, Treasury Secretary Janet Yellen has repeatedly suggested that fundamental questions exist about the legitimacy and stability of cryptocurrencies and that the US should implement an appropriate regulatory framework.

Despite these siren voices, bespoke regulatory regimes for crypto have not yet been put in place on either side of the Atlantic, although it can only be a matter of time before they are.

Canada also has no crypto-specific regulations. Instead, cryptos are regulated under the country’s securities laws – part of the mandate of Canada’s 13 securities regulatory agencies (SRAs), established by ten provincial and three territorial governments.

Not considered legal tender under the Bank of Canada Act, cryptocurrencies are classified as a commodity rather than money, while Canadian securities laws treat cryptos as tokens, classifying them as securities.

But Canada’s regulatory framework is distinctly more supportive of crypto than the US, which may have been a driver for KPMG’s local move into crypto. Notably, the Canadian Securities Administrators (CSA) allow financial innovations to test the waters for a designated period of time, during which they are exempt from the compliance rules under existing securities regulation.

The CSA is also breaking fresh ground in defining the contractual right to custodied crypto assets as a security, making Canada the first jurisdiction in the world to do so. This potentially puts Canadian crypto players on a path to experience the type of regulation that is not yet seen elsewhere.

Like other cryptos, bitcoin and ethereum are regarded by investors as speculative assets. Beyond their inherent volatility, KPMG’s decision to add digital assets to its balance sheet creates other potential risks including anti-money laundering (AML) and the future of tax reform.

For the partners of KPMG Canada, there are also compliance considerations. These extend to areas for which banks are typically responsible: security and AML checks. Notably, the International Financial Reporting Standards (IFRS) has no specific provisions that detail how to account for cryptocurrencies.

Big corporations’ involvement in crypto is both exciting and welcome. Having crossed that investment Rubicon, however, they will have to implement and maintain effective regulation and supervision in order to prevent white-collar crime, money laundering and cybersecurity breaches, among other issues.

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.

The last 10 years have seen significant changes in the debate around what the most important channel for business is – brick and mortar or digital channels. But in the shadow of the pandemic, and the accelerated shift towards digital it spurred across the world, that debate has been well and truly put to rest. We’re now in the digital-first era, and this has meant financial organisations such as banks have needed to significantly transform business models.

by Amir Nooriala, Chief Commercial Officer, Callsign

Banks have traditionally relied on branches to drive loyalty and deliver experiences to customers. But with digital channels such as websites and mobile apps now becoming the most important avenues for business, old methods of driving experience and loyalty have been replaced by digital factors, such as app ratings.

So, it’s no surprise that in a digital-first world, businesses must leverage digital-first solutions. But if satisfaction levels are judged by the quality of a digital experience, then businesses not only need to ensure smooth and seamless access to services but also make sure security is a top priority.

However, analogue solutions that many organisations in finance still use for customer authentication – such as one-time passwords (OTPs) – fall short of achieving these goals.

The pressure is on for businesses to find new, truly digital-first solutions that make their customers’ lives easier and differentiate their experience from competitors. But this is a balancing act that needs to also ensure the safety and security of every online interaction because if ease comes at a cost to security, businesses risk losing customers altogether.

Vulnerable systems built on outdated foundations

When it comes to financial institutions, in particular, the ability to adapt to the times has always been part of their success. Some banks are centuries old, and to remain relevant they’ve had to adapt their business models, services, and cultures countless times, all while maintaining the integrity of the sensitive information they hold.

However, over time, that imperative to maintain the safety of their data has led to the accrual of legacy systems for most organisations. While this has been a long-standing problem, in a digital-first world, legacy systems present a particularly glaring vulnerability when it comes to authentication.

Throughout the pandemic, hackers and ransomware attackers took advantage of global uncertainty and thousands of people faced a barrage of text message-based scams over this period. This highlighted the already significant problem with commonly used authentication methods that so many businesses rely on.

In fact, almost a quarter of people questioned for a recent Callsign survey said they received more texts from scammers than their own friends and family.

Organisations’ unwillingness or inability to stop utilising outdated authentication processes such as OTPs are fuelling a worsening crisis in scams and fraud. Businesses developing their digital transformation strategy need to see it as a chance to approach everything they do with a digital-first mindset, and not simply try and recreate digital versions of existing solutions.

And to make this a reality, organisations must rethink their systems in line with how their customers actually behave online and build their solutions accordingly.

The verified path to digital-first innovation

There are a number of technologies that are ideal for financial organisations looking to elevate their authentication methods to digital-first levels that seamlessly and frictionlessly integrate into their customer journeys.

One such solution is passive behavioural biometrics, software capable of taking into consideration millions of data points when verifying the identity of a user. The key difference between behavioural and physical biometrics – and why behavioural biometrics is the superior authentication method – is that it isn’t reliant on a single device (it’s device agnostic).

So, when combined with device and threat intelligence, the solution can circumvent the single point of failure issue that so many other authentication methods fall foul of.

This makes it ideal for our modern, digital-first world where customers want to use a variety of devices and channels to access online services. By making your authentication method device-agnostic, user experience can be ensured in a secure and non-disruptive way, whatever device is being used.

And as this solution can be seamlessly integrated into any point of the customer’s journey, it’s a much more fitting solution for a sector that has always been on the cusp of innovation.

Re-building for a new era of authentication

In order to thrive, organisations in the financial sector need to be prepared to interrogate every aspect of their operations to make sure they are delivering the most convenient and secure service to customers online.

To achieve this, organisations need to be prepared to re-lay their technological foundations. Elevating the importance of digital identity authentication is one such vital change, and businesses need to realise it will only continue to grow as a priority for customers going into the future.

Because the threat from bad actors and cyberattacks is only worsening. So, while innovation is key to attracting customers, security must be at the core if businesses are to retain loyalty. And it will take collaboration both internally and with partners to ensure that customers have the security they deserve.

Financial services firms are seeing rapid growth in data volumes and diversity. Various trends are contributing to this growth of available data across the sector. One of the drivers is that firms need to disclose more to comply with the continuing push towards regulatory transparency.

by Neil Sandle, Head of Product Management, Alveo

In addition, a lot more data is being generated and collected through digitalisation, as a by-product of business activities, often referred to as ‘digital exhaust,’ and through the use of innovative new techniques such as natural language processing (NLP), to gauge market sentiment. These new data sets are used for a range of reasons by finance firms, from regulatory compliance to enhanced insight into potential investments.

The availability of this data and the potential it provides, along with increasingly data-intensive jobs and reporting requirements, means financial firms need to improve their market data access and analytics capabilities.

However, making good use of this data is complex. In order to prevent being inundated, firms need to develop a shopping list of companies or financial products they want to get the data from. They then need to decide what information to collect. Once sourced, they need to expose what data sets are available and highlight to business users, what the sources are, when data was requested, what came back, and what quality checks were taken.

Basically, firms need to be transparent about what is available within the company and what its provenance has been. They also need to know all the contextual information, such as was the data disclosed directly, is it expert opinion or just sentiment from the Internet and who has permission to use it?

With all this information available it becomes much easier for financial firms to decide what data they wish to use.

There are certain key processes data needs to go through before it can be fully trusted. If the data is for operational purposes, firms need a data set that is high-quality and delivered reliably from a provider they can trust. As they are going to put it into an automated, day-to-day recurring process, they need predictability around the availability and quality of the data.

However, if the data is for market exploration or research, the user might only want to use each data set once but are nevertheless likely to be more adventurous in finding new data sets that give them an edge in the market. The quality of the data and the ability to trust it implicitly are nevertheless still critically important.

 Inadequate existing approaches

There is a range of drawbacks with existing approaches to market data management and analytics. IT is typically used to automate processes quickly, but the downside is financial and market analysts are often hardwired to specific datasets and data formats.

With existing approaches, it is often difficult to bring in new data sets because new data comes in various formats. Typically, onboarding and operationalising new data is very costly. If users want to either bring in a new source or connect a new application or financial model, it is not only very expensive but also error-prone.

In addition, it is often hard for firms to ascertain the quality of the data they are dealing with, or even to make an educated guess of how much to rely on it.

Market data collection, preparation and analytics are also historically different disciplines, separately managed and executed. Often when a data set comes in, somebody will work on it to verify, cross-reference and integrate it. That data then has to be copied and put in another database before another analyst can run a risk or investment model against it.

While it is hard to gather data in the first place, to then put it into a shape and form, and place it where an analyst can get to work on it is quite cumbersome. Consequently, the logistics don’t really lend themselves to faster uptime or a quick process.

The benefits of big data tools

The latest big data management tools can help a great deal in this context. They tend to use cloud-native technology, so they are easily scalable up and down depending on the intensity or volume of the data. Using cloud-based platforms can also give firms a more elastic way of paying and of ensuring they only pay for the resources they use.

Also, the latest tools are able to facilitate the integration of data management and analytics, something which has proved to be difficult with legacy approaches. The use of underlying technologies like Cassandra and Spark makes it much easier to bring business logic or financial models to the data, streamlining the whole process and driving operational efficiencies.

Furthermore, in-memory data grids can be used to deliver a fast response time to queries, together with integrated feeds to streamline onboarding and deliver easy distribution. These kinds of feeds can provide last mile integration both to consuming systems and to users, enabling them to gain critical business intelligence that in turn supports faster and more informed decision-making

Maximising Return on Investment

In summary, all firms working in the finance or financial services sector should be looking to maximise their data return on investment (RoI). They need to source the right data and ensure they are getting the most from it. The ‘know your data’ message is important here because finance firms need to know what they have, understand its lineage and track its distribution, which is in essence good data governance.

Equally important, finance firms should also ensure their stakeholders know what data is available and that they can easily access the data they require. Ultimately, the latest big data management tools will make it easier for finance to gain that all important competitive edge.

Policymakers and regulators around the world have pointed to cyber threats from criminal and state actors as an increasing threat to financial stability. Last month, US Treasury Secretary Janet Yellen – along with finance ministers and central bank chiefs from the Group of Seven nations – conducted an exercise covering how G7 members will seek to cooperate in the hypothetical event of a significant, cross-border incident affecting the financial sector.

by Fabien Rech, EMEA Vice President, McAfee

Such concerns are widespread, with 80% of UK IT professionals anticipating a moderate or even substantial impact by increased demand for their services or products this holiday season. The extra demand is compounded by the reduced size of teams and greater online activity. With cyber threats to the financial industry front of mind, and organisations across the sector coming under scrutiny as to whether they are doing enough to protect themselves, this year’s peak season – and subsequent rise in online activity – is cause for concern.

While this paints a bleak picture, organisations can be proactive in defending their networks, data, customers, and employees, against the anticipated increase in holiday cybercrime by implementing certain security measures.

Using technology to bolster teams

Demand for cybersecurity is surging, and today there are a number of technologies that can help to bolster security measures, providing additional support for often stretched security teams. Threat intelligence can offer unique visibility into online dangers such as botnets, worms, DNS attacks, and even advanced persistent threats, protecting FS organisations against cyberthreats across all vectors, including file, web, message, and network.

In addition, taking a Zero Trust approach to security enforces granular, adaptive, and context-aware policies for providing secure and seamless Zero Trust access to private applications hosted across clouds and corporate data centres, from any remote location and device. This will be particularly useful as more employees choose to work remotely.

Prioritising employee awareness

Beyond technologies, the adoption of an awareness-first approach is vital. Proactive cybersecurity awareness training for all employees – not just those in the security team – is essential, especially when encountering holiday phishing emails. As the cyber threat is always evolving, so too must organisations – ensuring that their team’s knowledge and ability to identify, avoid and negate those threats also grow in turn.

This awareness-first strategy requires leaders to move away from a ‘breach of the month’ approach, instead of using proactive training measures to build security into the fabric of their organisation, breaking down siloes of threat and information intelligence across the business, so that all employees are aware of how they can contribute to the battle against cyberthreats during the peak period and beyond.

Some banks are already taking a proactive approach to testing employee understanding when it comes to cybersecurity, for example, resistance to spam or phishing emails, and knowing not to plug unknown USB keys into their laptop. If employees don’t appear to have sufficient knowledge of threats and best practices, they will automatically be required to take part in further training.

Other key steps to take in this proactive approach include increasing the frequency (and testing) of software updates, boosting the number of internal IT-related communications to keep everybody informed, and implementing new software solutions with due diligence.

Implementing a response plan

It’s also important to recognise that protective measures might not work 100% of the time. As hackers become ever more sophisticated, it’s vital for FS organisations to design a holistic, clearly communicable plan for if (and when) things do go wrong.

Developing a robust incident response plan could mean the difference between being able to respond and remedy a security breach in minutes rather than hours, ensuring the least amount of downtime possible. When asked, 43% of businesses reported suffering from downtime due to a cyber concern in the last 18 months – for 80% this happened during peak season and lasted more than 12 hours for almost a quarter (23%)

Again here, training forms a big part – making sure employees know what to do and who to inform when an incident does occur is at the heart of any effective response plan, as is encouraging a culture of honesty and transparency. An organisation in which employees are wary of acknowledging a mistake or informing someone of a possible accidental breach is not a secure one.

The year is full of challenging peak periods, from the public holidays at the end of the year to summer vacations and various religious/spiritual holidays. The need for vigilance has never been greater or more constant, and financial services organisations, in particular, have a need to protect the data and money of their customers, as well as the resilience of their own organisations.

By using technology, training, and incident response awareness, leaders in the sector can help to bolster teams against the increasing sophistication of cyberthreats, staying safe while staying connected. The peak season offers unique challenges, but ultimately the goal is to develop a resilient and adaptable organisation that can ensure security year-round, allowing employees to thrive, wherever they choose to work without having to worry about threats.

Buy Now Pay Later (BNPL) has seen a surge in growth since the start of the pandemic, but in order for the BNPL industry to sustain its development, it must be underpinned by comprehensive technology designed to optimise experience both for the merchant and the customer.

by Tom Myles, Chief Technology Officer, Deko

The most influential technology for business has been the rise of AI, machine learning and big data, having now permeated almost all sectors. Indeed, recent research highlights the key role that AI is expected to play in the future of fintech as a whole, with two-thirds of fintech firms predicting it to have more impact on the sector than any other tech in the next five years. As for BNPL products in particular, a forecast market of £26.4 billion by 2024 would mean it more than doubling in three years, so there is huge growth potential for AI to help unlock.

Payment optimisation

Lenders can use AI and machine learning to extract more value from BNPL platforms. Machine learning models, for instance, are built on data, and payments systems generate large quantities of data from which potential lenders can gain insights into consumer behaviour.

These data-driven decisions can streamline the process of matching the right lender to the right buyer at the right time, which will be all the more useful for unlocking the potential of platforms that operate on a multi-lender, multi-product basis. AI and machine learning models can match consumers to the right member of a multi-lender roster, enabling an increased provision of credit for consumers.

Delivering a rewarding experience for consumers is just as important as the flexibility of the financial technology involved, as increasingly tech-savvy consumers continually elevate the minimum standard of the online experiences in which they are prepared to engage. In particular, consumers are increasingly reticent to engage in elongated sign-up processes and demand a mobile-first approach. Offering a visibly streamlined, omnichannel payments process will therefore prove to be a vital differentiator in an ever more competitive market.

Moreover, empowering consumers and lenders to make more streamlined transactions will also be beneficial for merchants. AI-enabled technology will enhance the flexibility of retail finance products, enabling platforms to process more transactions at a higher pace. This, combined with reduced rates of basket abandonment, will help retailers increase their sales volume.

Fraud prevention

While merchants may relish the prospect of driving more sales, machine learning can also support them in another critical area that may be somewhat sobering to consider. As commerce continues to migrate online, the threat of fraudulent transactions looms larger than ever.

Leveraging AI and machine learning means that payment platforms can learn to recognise patterns in consumer behaviour, based on analysis of the data generated from previous transactions, so even the smallest changes in behaviour can be identified. These data-driven insights will enable automated flagging of potentially risky transactions, which will reliably protect merchants, lenders and consumers from fraud.

Automating this process is vital in a world where online fraud is increasingly sophisticated. An older, rules-based model might be able to test for numerous different types of fraud that have been recorded previously, but the system would remain vulnerable to as yet undetected types of fraud.

Future of FinTech

Using technology both to streamline payments and to prevent fraud will require FinTech platforms to strike a delicate balance. Security is of course vital, but rigorous fraud prevention processes should not come at the expense of a streamlined, speedy checkout from the user’s point of view. Indeed, for fintech platforms as well as for users, improved security and streamlined payment processes will ideally go hand-in-hand.

FinTech firms must therefore invest due consideration as well as resources into AI-enabled functionality for their platforms. And this investment has already proven well worth making. Given the benefits for both merchants and lenders, it is perhaps unsurprising that 83% of financial services professionals agreed that “AI is important to my future company’s success”. Indeed, these forward-thinking technologies and firms are integral to the development of the payments sector.

Instant payment processing is expected by today’s customers and clients, and as the world of business adapts to hybrid work, there is no better way to meet this need than with cryptocurrency. Cryptocurrencies allow businesses to make secure, instantaneous transactions while eliminating the middleman.

by Gabby Baglino, Digital Marketing Specialist, Bryt Software

This keeps everyone’s data safe and reduces transaction fees — and those savings can go toward growing the business rather than paying for unnecessary charges. Let’s take a closer look at why cryptocurrency is key to hybrid and remote work and the powerful new technology that makes it possible.

What is blockchain technology?

A blockchain is a public ledger that contains data from anywhere in the world. This entirely digital database is shared across a network that can include everyone in a company’s workforce, no matter where they’re physically located.

By decentralizing the information, this revolutionary technology ensures the security of financial transactions. When using the blockchain, no third parties are necessary.

Unlike a traditional database, the blockchain collects data and stores it in blocks. When one block is filled with data, it’s closed and linked to the previous block in the chain. Simply put, the blockchain is a chain of digital blocks, and once a block is closed the information it contains cannot be altered or deleted.

In the case of cryptocurrencies like Bitcoin, the blockchain’s decentralized nature allows it to be used as a storehouse of transaction information. All users have collective control over the data, and the changes are irreversible.

Financial transactions can be made securely among an unlimited number of team members located anywhere in the world. And when businesses need to store sensitive transaction information, the data records are protected from any kind of update, deletion, or destruction.

How businesses benefit from using cryptocurrency

Many business owners encourage crypto usage in everyday transactions. Let’s take a look at some ways that this type of transaction benefits small businesses and enterprises alike.

1. It’s more secure

Identity theft can lead to significant personal as well as corporate loss. When you make an online payment, you’ll need to enter credit card information. Your sensitive data is then sent through channels and stored in databases where it may be the target of a cyberattack.

Hackers can gain access to your account details and use them for unauthorized transactions even if your credit card numbers aren’t compromised.

The identification process made possible by the blockchain allows all your personal data to be encrypted in a single place and kept safe by advanced cryptography. With this method, identification is faster and more secure than it would be going through third parties that may be vulnerable to attack.

2. Smarter use of funds

Dependency on third parties can be a challenge for businesses that want to use their finances to expand. Lack of resources and external pressure can get in the way of taking appropriate and timely financial actions.

Though they may have plenty of great ideas, enterprises often cannot expand the way they want due to the lack of funds or the freedom to do what they want with their money. With blockchain technology, businesses have the liberty to use their finances effectively because they have direct access to their money.

3. No dependency on third parties

Cryptocurrency’s ability to allow businesses to avoid the middleman is a primary reason why cryptocurrency is attractive for companies of all sizes.

When a business depends on banks or other payment gateways, each transaction comes with a percentage fee, usually between 1% and 4%. Transaction fees can add up quickly, particularly for larger corporations. This can reduce the efficiency of the business in the long run.

Transaction fees can be crippling for smaller businesses, so it’s natural for small to midsize businesses to turn to cryptocurrency for relief. With blockchain technology, businesses can transact with global markets with little concern about exchange rates and processing fees.

Thanks to the technology, buyers and sellers can now communicate with each other directly without having to go through a bank. As a result, many businesses can afford high discounts to draw customers who can pay using cryptocurrency.

A study conducted in 2020 reports that 40% of customers who pay using digital cryptocurrency are new to the sellers. Clearly, the adoption of cryptocurrency as a mode of payment has increased the client base for many enterprises.

Cryptocurrency and the hybrid work era

As industries find ways to adapt to the explosion of work from home (WFH), the importance of paying employees in cryptocurrency has become central to the conversation. Thanks to remote work, businesses can cultivate hybrid teams, recruiting the best talent from anywhere in the world to work virtually with their in-office team members.

As fiat currencies are subjected to inflation and processing fees, among other things, cryptocurrencies make it easier for companies to pay their employees. When the employees get a combination of digital and fiat currencies as payment, they can later convert the crypto into fiat. 

Workers who are paid in cryptocurrencies have more control over their cash. And since the process uses effective encryption via blockchain technology, hackers have no access to sensitive data.

As hybrid work has become established, digital payment methods are also becoming acceptable in modern society. As an entirely online mode of payment, cryptocurrency offers an advantage over other payment methods with convenience as well as security.

Remote work isn’t going away anytime soon. As hybrid work cements its place in the world of work, digital currencies ensure that businesses run smoothly by offering the best solution to conduct transactions. Hybrid work and cryptocurrency will go hand-in-hand for data security and ease of use in the coming years.