IBSi Blogs

By Kevin Walkup, President and COO of Harmonate, a data operations firm serving private funds.

Can the confluence of three fast-moving market forces make for a perfect storm in a specific industry? Fund administers are about to find out.

First, the pandemic has driven down valuations in expectation of a recession. Asset managers are under pressure to come up with investment strategies that perform while controlling costs. They can’t waste time on anything that doesn’t clearly help.

Second, before the coronavirus arrived, margins were already dropping and fees had already fallen in large part from competition in finance. The truth is that neither will be rebounding anytime soon. The result is that asset managers can’t waste money. On the contrary, they need to make up for lost revenue.

Third, for all of the above reasons, funds were also already shifting away from internal administration before the coronavirus. Now that pace is accelerating due to the stresses arising from the pandemic.

For fund administrators, a typhoon of outsourcing is coming our way. Asset managers are still hiring data scientists to perform in-house work and develop domain expertise. But they increasingly are going to reach out for third-party partners, too. Funds will have little choice if they want to compete.

I’m going to predict that the administrators who live long and prosper in the new climate will be the ones who adopt a high-touch approach that utilizes solid data operations for funds. They’ll be the ones capitalizing on new fund administration that resembles the close collaboration that asset managers expect from their in-house teams except with more innovation.

High-touch is the ability to answer questions and react to fund managers’ needs quickly and accurately. In a high-touch relationship, speed and accuracy are key. Managers need to have information at their fingertips to respond promptly to events, to plan and to answer investor queries with confidence. Working closely at speed, however, can only come with automation that leverages the power of talented teams.

Technology is already at the center of fund administration. When asset managers talk about fund services, they mention statement processing, capital statements and other reporting. But in reality the asset managers are talking about data operations. They might not view those processes as high-tech because they don’t ask about which tools helped human administrators produce those documents. Humans can do it. But humans need data operations, mostly because speed and accuracy are the result of data operations.

The most advanced data operations for funds can take reporting from 2 weeks to 24 hours. Accounting processes can decrease from more than 100 minutes per investor to 1 minute per investor. Those numbers gain the attention of hard-pressed managers. Even if those numbers weren’t so staggering, can you imagine a leader not performing thoughtful due diligence?

New fund administrators should first start by asking managers about their needs, their challenges and the solutions that they think would improve their productivity. There’s a joke going around that a fund in a major metropolitan area was using interns and Excel spreadsheets for fund services. It probably echoes the truth, though, suggesting plenty of asset managers have not yet even considered data operations that are revolutionizing funds.

That said, as they increasingly shop around and the trends mentioned earlier, more asset managers will understand that data operations will dramatically improve their productivity. What’s more, many will eschew the mega consultancies in hopes of finding more boutique service providers who will treat their fund with extra love and care.

That gets us back to high-touch. If an asset manager is seeking new fund administration, then they are likely trying to chart a course through the storm that has been brewing in recent years but has since exploded with the appearance of the coronavirus. Fund administrators who work with those kinds of managers will need to capitalize on the most advanced machine learning and domain expertise if they want to keep up. Batten the hatches.

Kevin Walkup
President and COO
Harmonate

David Orme, SVP, Sales & Marketing, IDEX Biometrics ASA

The coronavirus pandemic has changed consumer behaviours and attitudes towards digital payments. While previously, consumers were happy to punch in a PIN, or even provide a signature for a purchase, they are now familiar with more convenient and safer touch-free methods, and this is unlikely to change following the pandemic.

Since the beginning of lockdown, when the World Health Organization encouraged people to not use cash, touch-free authentication has played a pivotal role in helping to reduce the spread of the virus. However, as shops and restaurants across the world begin to reopen, we are seeing an increasing number of people making payments via touch-pads. As we return to the ‘new normal’, the global payments industry must now consider how we can protect consumers from the pandemic and reduce the risk of another outbreak.

During the pandemic, touch-free payments began to gain international traction across the world, changing behaviour during the payment process. Contactless payments has also continued to grow since the reopening of the economy. In Europe, high street stores have rapidly shifted to contactless payments, often refusing to accept cash. Meanwhile in the USA, levels of contactless payments have rocketed since the pandemic, after a slow initial adoption of the service – US banks only adopted contactless cards in 2019 compared to 2007 in the UK. According to Visa, overall contactless usage in the USA has grown 150% year-on-year as of May 2020.

Even mega-retailer, Walmart, has recently introduced contactless options for in-store shopping and delivery to protect its customers during the pandemic – showing there is growing demand for a touch-free and convenient way to pay across the world. This has raised awareness of touch-free payments among consumers looking to reduce contact-based interactions and time spent at the checkout during the pandemic.

Tapping into the future of mobile payments

Mobile payments are continuing to grow in popularity, again, showing the desire for touch-free authentication among consumers. According to Forbes, the US mobile payment market – currently only sixth in the world – has increased 41% and is worth more than $98 billion.

To respond to the growth of touch-free payments among small vendors, PayPal has launched a new QR code-based payment app that allows market stall holders or businesses without a PoS machine to accept payment through a code. This means even the smallest of merchants, from small stores and farmer’s markets to craft sales, can now go cash-free and use touch-free payments for everything.

Meanwhile, China has long been using QR code-based apps, such as WeChat Pay from tech giant TenCent and AliPay from Alibaba. The apps are so widely used that street vendors display QR codes for payments and together the two fintech giants control about 90% of China’s digital payments market.

Payment cards remain king

At the same time, payment cards are still consumers preferred way to pay. Of course, we only need to look to Apple and Google, who recently have launched physical payment cards despite running mobile payment apps for further proof that payment cards are far from dead.

So why aren’t cards on their way out, given the growth of mobile payments?

We know that consumers still look to payment cards for security and a sense of familiarity while shopping. According to IDEX Biometrics’ research carried out in the UK, only 3% of consumers choose to use mobile payments, while nearly two-thirds (65%) state that carrying their debit card provides a sense of security. And when it comes to touch-free payments, only biometric payment cards can provide the most secure level of validation with an easy digital experience for shoppers.

Despite the popularity of WeChat as a payment app, China’s biggest card provider China UnionPay has recognised that its customers aren’t ready to give up on physical payment cards either. China UnionPay has recently certified the first biometric fingerprint card technology in the country as they look to the use of biometric technology in cards to provide an extra layer of security, with added convenience and hygiene during a payment transaction.

Touch-free card payments – the key to securing data

Biometric fingerprint payment cards allow the user to authenticate their ID by touching their finger to the card’s sensor while holding it over the contactless Point of Sale. Therefore, the shopper only has to hold their own card over the PoS system, making the entire transaction process free of public PIN pads or checkout counters. Not only does touch-free payment technology provide consumers with the convenience of contactless or a mobile payment but the process offers far greater security, as the card is personally tied to the owner.

With biometric technologies like fingerprints, facial and voice recognition, and even iris recognition becoming popular in smartphones, consumers are becoming familiar with the technology. It is only a matter of time until biometric identification in payment cards will become essential to help consumers navigate the shopping and transaction process safely, speedily and securely.

As our economy gradually reopens, the financial services industry has a responsibility to protect consumers during the transaction process, whether it’s in stores, on transport systems and even in stadiums. The payment industry must adapt and adopt fingerprint biometric payment cards to ensure touch-free authentication for all, and to keep payments seamless, secure and sanitary.

David Orme
SVP, Sales & Marketing
IDEX Biometrics ASA

By Stephen Ferry, Managing Director at Pay360 by Capita

For businesses, the impact of Covid-19 has changed the way they interact with their customers. In order to survive, many who viewed an ecommerce offering as a “nice to have” have been forced to act quickly and decisively, moving into unchartered territory: by becoming a fully-fledged online retailer. Of course, amidst such dramatic change and uncertainty, this is when fraudsters can thrive.

Many businesses might dismiss payment fraud as only applying to large corporates, but that is simply not the case, as every business will encounter fraud, whether they know about it or not.

According to a recent report in Retail Times, fraudsters are using the surge in online activity to target unsuspecting consumers and merchants. The average ticket price of attempted fraud increased by £14 in May ‘20, driven by electronics and retail goods. During the period from January to May 2020, the fraud attempt rate by value increased to 4.3%. Significant, by any standards.

In light of the dramatic increase in online fraud, businesses need to be conscious of customer contested card payments (“chargebacks”). The intention should be to minimise chargebacks as much possible and the threshold for this is around 1%, though the target should be 0.5%. However, when a merchant’s chargebacks go over 1% this becomes a red flag for many card acquirers. This can result in higher security or rolling reserves, higher charges and, worse case, the card acquirer serving a merchant notice.

To put this into context, according to Chargebacks911, only 18% of chargebacks are even contested by merchants, because they don’t have the internal resource or the technology to contest them. Repeat fraud is also assured, since 2 of out every 5 consumers who commit this type of ‘’friendly fraud” will do it again within two months.

So, where do businesses start? Many businesses are not even aware that they are being targeted or think that the costs of preventing card fraud will be greater than the fraud itself, which is usually not the case at all.

There are many fraud prevention solutions on the market sold as standalone products or integrated within payment platforms. It makes good sense to have a fraud prevention solution baked into your software, to enable the seamless process that merchants and their customers crave. Make sure you shop around to find one that fits into your business, integrates with your existing system and can scale with you as your business grows. Select one that has a straightforward and easy to understand interface and an interactive dashboard that can be connected to multiple data points. Also make sure rules are available to be set up in real time and offer complete flexibility.

Integrated fraud solutions can save merchants thousands of pounds in lost revenue, chargeback costs and administration time, and enhance the right customer payment experience. The key message I leave for businesses is – the threat of online fraud is current and growing. It’s a risk you ignore or underestimate at your peril.

Stephen Ferry
Managing Director
Pay360 by Capita

James Butland, VP Global Banking at Airwallex

Businesses will always need banks, but this necessity does not equate to trusting or even liking their chosen provider. The last decade has seen the digitisation of financial services change entirely how people manage their finances and what they want from banking suppliers – from instant contact, API integrations and more importantly, choice in the market.

COVID-19 has presented an optimum time for banking providers old and new to engage with their customers on a human level, rather than simply transactional. Since their rise from the early 2010s challenger banks have gained huge support due to customers no longer needing to physically visit a branch and the high tech digitisation of managing finances. However, traditional providers continue to overwhelmingly dominate market share and retain long-standing customers, whether they trust them or not.

A shift in attitudes since 2008

The years following the financial crash have witnessed an explosion of choice in banking, in turn altering what businesses are looking for when choosing a provider. The effects of 2008 have had a major impact on the structure of the industry. Advancements in technology and increasing competition from newer financial institutions entering the market means that what was once a monopoly for traditional high street banks is no longer the case. With an abundance of new options, it is only to be expected that customer needs have changed.

The arrival of digital-only banks was a blessing for customers hoping to have their own needs put first. Trust is core to UK banking and when customers hear a provider has a UK banking license, or is regulated by the FCA, it’s an immediate proofpoint ticked off the list. New FinTech companies that have come in and disrupted the market over the past decade were born in part from a loss of confidence in the traditional banking sector as customers sought options elsewhere. The crash opened up opportunities to disrupt the status quo of banking, and businesses re-evaluated what was important to them. Something FinTechs have over traditional banks is agility to expand their services to suit customer demand. For example, aside from often being cheaper, faster, more convenient, new financial providers can listen to customer wants and adapt their platform accordingly, more quickly and easily to meet demand, as the technology is not shackled to older legacy hardware and business processes.

The consequences of the pandemic for the industry

COVID-19 has offered banks an apt opportunity to show their customers how best they can serve them during hard times. In theory, this should provide financial providers with an optimum time to gain customer trust, but research suggests there is a notable gap between what SMEs feel about banks carrying out transactional tasks against the level of trust that banks will look after their long-term financial well-being.

Before the pandemic hit the number of physical banks branches were already in decline, especially in Spain, Luxembourg and Iceland. The lessering need for bricks and mortar means a wider array of choice and as we come out the other side of COVID-19, digital only banking will likely continue as the norm, particularly with advice from The World Health Organisation to use contactless payments and avoid handling cash to reduce the spread of germs. Where there are health connotations attached, the lessening of visits to high street bank branches may mean a continual decline in branch use. Lloyds Bank saw a 50 per cent increase in those registering for online banking compared to last year, while TSB has seen a rise of 137 per cent since the start of lockdown.

Business banking needs in 2020

A huge number of businesses have struggled immensely during COVID-19, with more than half of UK SMEs seeing a significant decline in sales, or worse, out of business entirely. Now more than ever business owners need the support of their bank, so the mission-driven ethos newer providers tend to offer will hold an immense amount of significance. FinTechs cater towards changing customer demand quicker than traditional providers because their platforms are built to adapt. If a new feature is being requested they can most likely build it and be much more transparent on progress. For example a public roadmap or regular company updates clearly demonstrates to users what they can expect and when.

Trust is immensely important for international businesses needing to manage money in multiple currencies. The cost of sending money abroad can be extortionate and traditional providers are guilty of inflating the exchange rate, while also adding on high foreign transaction and receiving fees. It is often when businesses realise they have lost out on a significant chunk of money that they are incentivised to search for alternatives. Many FinTech companies are reliable options to ensure businesses do not get ‘stung’ each time they send, spend, or receive money in another currency. Airwallex, for example, provides clients with easy and immediate access to international markets by allowing them to set up local business accounts and displaying a transparent rate at the time of the transaction.

The shock of COVID-19 to the world economy has been huge and affected businesses and consumers alike on a global scale across all industries. Trust was a huge problem in the previous financial crash because it was born out of decades of bad practice and excessive risk-taking, whereas this isn’t the case in 2020. Nonetheless, COVID-19 provided banks with the ideal time to show businesses how their needs were being put first, something that appears better communicated from the newer FinTech providers on the market. And while the shift to fully digital banking/payments is underway, traditional providers are still a long way off being competitive with the technology (and underlying customer demand) of the FinTechs of the past decade.

Whether or not this year has resulted in a growing amount of trust towards banking providers, or positively shifted attitudes is still yet to be discovered. One thing is for sure though, the effect this will have on customers’ futures will be remembered for years to come.

James Butland
VP Global Banking
Airwallex

Mohit Joshi, President, Infosys, in conversation with Siew Choo Soh, Managing Director, Group Head of Consumer Banking and Big Data/AI Technology, DBS

DBS is a leading financial services group in Asia with a presence in 18 markets. Headquartered and listed in Singapore, DBS is in the three key Asian axes of growth: Greater China, Southeast Asia and South Asia. The bank’s “AA-” and “Aa1” credit ratings are among the highest in the world.

Recognised for its global leadership, DBS has been named “World’s Best Bank” by Euromoney, “Global Bank of the Year” by The Banker and “Best Bank in the World” by Global Finance. The bank is at the forefront of leveraging digital technology to shape the future of banking, having been named “World’s Best Digital Bank” by Euromoney. In addition, DBS has been accorded the “Safest Bank in Asia” award by Global Finance for 11 consecutive years from 2009 to 2019.

In her conversation with Mohit Joshi from Infosys, Siew Choo Soh from DBS talks about how the bank has achieved a feat unmatched by other banks globally, to become the first bank to concurrently hold three global best bank awards. Siew Choo Soh is the Managing Director, Group Head of Consumer Banking and Big Data/AI Technology at DBS. In her role, she drives digital transformation leveraging Agile, Cloud Computing, Big Data, AI, Machine Learning and is also increasing the representation of Women in Tech. Mohit Joshi is a President of Infosys. He is Head of Banking, Financial Services & Insurance ( BFSI), Healthcare and Life Sciences at Infosys and is also responsible for firm-wide sales operations and reporting processes, including large deal pursuits and top account growth.

Mohit Joshi: You have had a very interesting, fascinating and a well-documented career. Could you just give us a sense of your journey and the key lessons through-out your years in technology at DBS?

Siew Choo: It was a point in my career when I was ready to move towards new challenges and that was when DBS came calling. They asked me to look at a transformation they were about to start and pick up an opportunity there. When I first started in DBS, I was working on all the back-end technology, core banking is one of them from Finacle. As well as all the supporting units for the business such as legal, compliance, finance and so on. Those were the areas that I had never done in my entire career, I deliberately asked to be assigned to such a kind of technology to make sure I can get a 360-degree view of technology in a bank. I did that for about 2 years and after that I was given another new opportunity to head the consumer bank technology and the big data platform for the bank. That is what I am currently doing and still in the journey to further transform these 2 areas in the bank.

I was very fortunate to work with companies that truly supported mobility of people. We actually select people for roles and not because you have done it before but because of your calibre and as well as your passion to make an impact.

Mohit Joshi: You are also one of the few female leaders in technology across the world. For us at Infosys, 40% of our employees are women. What advice would you have for them as they move up in their career and take senior positions.

Siew Choo: Wow, 40% is a great achievement. Well done. I would say that women are typically the shy lot and we always have very high standards. To me, I think every woman should be bold and be fearless. One of my favorite icon is the fearless girl that has been moved in front of the New York Stock Exchange. I think that should be the model for every single girl. Be fearless and go after your dreams and do what you are passionate about.

Mohit Joshi: Now, moving to DBS. DBS has been a remarkable bank for many decades, but specially over the past 10 years. In 2019, the bank won every single ‘Best Bank in the World’ award, every single magazine and every single survey. What would you say is the vision of DBS, what is DBS truly looking to accomplish?

Siew Choo: In the last 10 years, we have been guided by our current CEO, Piyush Gupta. He has a very clear vision about where the bank should be, how we the bank should add value and how we should be transforming ourselves. I think the key part of it actually that we want to make sure that we are truly customer obsessed. We are striving every single day to make our customer experience seamless and we are always pioneering new areas to exceed the expectation of the customer. We have been doing this for many years and we continue to think of new ways to exceed the expectations of the customer, to make banking seamless and invisible to them. That has been the key part of our agenda.

Mohit Joshi: DBS is in a unique position where people contrast DBS with a Netflix or an Amazon just because your technology DNA is so strong. How do technology and business co-exist and succeed at DBS?

Siew Choo: We have a new saying at DBS that ‘business is tech and tech is business’. We are using technology as an enabler for business. Quite a few business models came about because of technology. That’s how we see technology as a revenue contributor rather than a support unit. That is a big contrast to many years ago to where we are now. In this whole agenda, we are quite relentless in pursuing cloud native, in making sure that our people are working in a truly agile manner as well as in the leverage of data and AI. We want to make sure that we do each of this in the true and correct way. There is a lot of effort put into educating our people, giving opportunity to attend various conferences and to be trained by the experts in the industry to understand the true essence. This is so that when we are implementing all of this, the architecture pattern for example, we are doing it the right way that we are able to reap the true benefits from those implementations.

We also benchmark ourselves with the big tech firms. For example, in the last one-two years we are trying to create a new enterprise data platform – ADA, to drive our AI agenda. Before we started, we went to all the various companies, especially the tech companies to look at what they use, what are the tools that they use and what is their operating model and so on. We created our platform based on those learnings.

Mohit Joshi: That’s very inspiring. From a Finacle perspective, we have had a relationship with DBS for many years now and you personally have been a very strong sponsor but also a very constructive critic of everything that Finacle needs to do. What is your advice to us as we invest and grow our platform?

Siew Choo: DBS has been in partnership with Infosys and Finacle for more than ten years. Finacle is definitely a core part of our architecture. As the bank grows up to become more and more digital to tackle new business models, it is important for us that Finacle evolves at the same pace as well as in the same direction as where we are going. So, in a sense the architecture pattern, the product capabilities, the agility of the teams as well as the user friendliness of the UI, those are all key part of what Finacle does to DBS. It is in our interest that we kept the agenda and the priorities of the bank in sync with Finacle.

DBS was recognised as the winner of the Celent Model Bank award in 2018. To download a copy of the Case Study click here.

By Garreth Dorree, Head Of Operations, Paysafe Group

As the battle to contain the global outbreak of COVID-19 continues, millions of people around the world stay at home to assist society’s effort to ‘flatten the curve’. One consequence of this is that consumers are increasingly choosing to shop online.

But even in times of global crisis, cybercriminals are on the lookout for ways to exploit unsuspecting targets. In fact, Action Fraud reported a 400% increase in COVID-19 related fraud in the UK between 1 February 2020 and 18 March 2020.

Most of these incidents include online shopping scams where people order protective masks, hand sanitizers, and other products that never arrive. However, scammers are increasingly preying on people’s fear and anxiety; the past few months have also seen an increase in phishing attacks, fake websites, and incidents of shipping fraud.

It’s too soon to tell how the pandemic will impact the world of business payment operations, but experts agree that the threat of increased fraudulent activity to businesses is likely to increase also.

 An ounce of prevention is worth a pound of cure

 Small businesses have already been severely impacted by COVID-19, so the effect of further damage such as fraudsters making payments using stolen or fake credit cards is even more catastrophic. For those that are able to offer online shopping services, it’s never been more important to secure your checkout and protect your business and your customers from falling victim to cybercrime and online fraudsters.

Sticking to the healthcare theme, it’s clear that prevention is better than cure when it comes to cybersecurity. However, 70% of online small-to-medium-sized businesses currently struggle to find a balance between improving security measures and their other primary objective at the checkout; making the online customer journey as quick and easy as possible.

This is according to recent research by Paysafe. The research also found that security is the top priority when selecting a payment service provider. 81% of online merchants believe that it’s the responsibility of their payment service provider to protect them from fraud, and a further 59% cited security as a critical factor to consider when deciding which service providers to partner with, ahead of reliability (49%) and cost (47%).

Fraud also remains a serious issue for all businesses. Over a third (36%) saw credit cards as the most vulnerable method of payment.

 The benefits of migrating to 3DS2

One of the best ways to keep your business and customers safe is to migrate to 3DS2 immediately. 3DS2 is the long-awaited upgrade of 3D Secure Authentication, the EMV verification protocol for processing card payments online securely. The new and improved 3DS2 builds on this and now enables mobile support and biometric validation. Most importantly it streamlines and secures the checkout experience for the customer, resulting in less cart abandonment, a better conversion rate, and much more robust security for e-commerce businesses.

Avoiding a dramatic increase in card declines is a key reason for merchants to integrate a 3DS2 solution into their checkouts, but there are also additional benefits to merchants and consumers that should persuade businesses to implement 3DS2 as soon as possible.

For example, unlike the current 3DS authentication, 3DS2 is optimized across all eCommerce devices including mobile. This is critical as, according to our research, more Millennials (79%) and Gen Z (72%) consumers shop regularly via their smartphone than any other device including a laptop or desktop computer.

3DS2 also improves customer experience by giving consumers more choice over how they authenticate payments. In addition, passive sharing of more than 100 data points (10x the current volume) for each transaction enables issuers to perform a better risk analysis, which results in significant improvements in fraud prevention without compromising a consumer’s checkout experience.

In this time of crisis, two of the greatest hurdles to overcome for eCommerce businesses are satisfying consumer demand for greater flexibility in the way they pay, and offering a slicker, more seamless checkout experience while giving the customer peace of mind that the payment is secure.

As a result, merchants need a payment service provider that can be adaptable and mindful of the bigger picture of solutions as the market evolves. While the pandemic will pass, it offers lessons for dealing with other global events in the future. Now is the time to take steps to safeguard your business against fraud and future proof your checkout in order to remain competitive with industry leaders and retail giants. Integrating PSD2 into your checkout as soon as possible means your business and your customers have the best chance of being protected from being a victim of fraud during these uncertain times.

(Disclaimer: The views and opinion presented in this article is that of the authors and not necessarily expresses the views of IBS Intelligence)

Digital transformation is having an undeniable impact on reshaping the finance sector as a modern industry. Banks are looking to emerging technologies in order to evolve and become more agile, especially in a world of demanding customers, new innovations, such as mobile payments, and increasing regulatory demands. Cloud adoption of RegTech is at the very heart of this digital evolution.

by Matthew Glickman, VP of Customer and Product Strategy at Snowflake Inc. 

While the industry has traditionally been slow to embrace innovation there are signs that even some of the more traditional, high street banks are placing cloud technology at the forefront of their business strategy. Research from the Bank of England revealed the UK’s 30 largest banks have adopted nearly 2,000 cloud-based applications between them.

However, there still remains an air of caution within the finance sector when it comes to moving to the cloud, stemming from concerns over financial regulation. Nearly half of UK firms cite complex regulatory requirements as a key barrier to adopting new technologies, such as the cloud. To maximise the full potential of embracing cloud technology, financial companies must look to the possibilities afforded to them by RegTech.

Streamlining the regulatory process

Whilst cloud computing is modernising the whole financial services sector and paving the way for innovation, its impact on regulatory technology will be particularly striking. The cloud will streamline the way financial regulators currently regulate other companies. Historically, banks have struggled to produce the metrics requested by regulators which has slowed down the regulatory process and even induced hefty fines.

Regulators will now have a unique opportunity, through a cloud-based, secure data exchange, to access a company’s data and run their own reporting. By utilising a cloud data exchange, financial regulators can integrate disparate systems to communicate in real-time. This creates a seamless flow of information by transforming data from multiple systems into the same ‘language’. Using RegTech, rgulators can therefore instantly view and analyse all relevant metrics, such as financial transactions, sales orders and stock levels. It also allows regulators to measure system risk entirely in real time.

Automating financial compliance

The ever-changing landscape of regulatory compliance is also driving financial organisations to utilise cloud-based regulatory technology and leave behind antiquated legacy solutions. New regulations are being consistently introduced and the JWG, a financial think tank, estimates that over 300 million pages of regulatory documents will be published by 2020. In addition, new directives and laws have been introduced, such as GDPR, which are holding companies to account and ensuring they take strict responsibility for their data.

By adopting RegTech solutions, financial companies can monitor the current state of compliance against upcoming regulations, as well as real-time compliance. A cloud-based RegTech solution will enable banks and regulators to build platforms that will make use of artificial intelligence and machine learning. This creates an end-to-end automated solution that provides an automated interpretation of financial compliance. Data can also be routinely monitored allowing companies to rapidly identify risks and potential areas of non-compliance.

The complex and changing landscape of data compliance, coupled with the rapid increase in data volumes, has meant that adopting a cloud-based RegTech solution is simply too hard to overlook. It is therefore no surprise that the RegTech industry has been growing exponentially over the last few years and is due to be worth $12.3 billion by 2023, up from its market value of $4.3 billion in 2019.

Coping in a data-driven era

The modernisation of the RegTech industry, through cloud computing, is characteristic of the whole fintech sector. The scalability that the cloud offers will also enable the industry to keep up with the dramatic rise in data. In a data-driven era, the financial services sector is arguably the most data-intensive sector in the global economy. Financial organisations produce huge amounts of data everyday with each monetary transaction and payment adding to their vast data sets.

A cloud-based data warehouse can be scaled up or down depending on usage. Should a bank need to expand geographically to accommodate a merger or acquisition then scaling up their data storage is seamlessly handled through the cloud. Furthermore, certain cloud solutions decouple storage from compute, so organisations only need to pay for when they are using a service.

Given the tangible benefits of cloud adoption, it is hardly surprising the worldwide public cloud services market is forecast to grow 17% in 2020.The financial industry is finally starting to leave behind its legacy systems and embrace a future of modernisation, made possible through the cloud.