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The rise of Fintech is a challenge for regulators, as outlined by the IMF earlier this year. Yet legislation isn’t the only area which needs to keep pace with the evolution of finance. As digital services and infrastructure expand, cybersecurity has never been more important.

by Simon Eyre, CISO, Drawbridge

Cyberattacks are on the rise – increasing in both frequency and sophistication – and financial players are a prime target. For instance, research from the Anti-Phishing Working Group, shows the financial sector (including banks) was the most frequently victimised by phishing in Q2 2022, accounting for over a quarter of all phishing attacks. A successful attack of any kind can have catastrophic consequences: in February, cryptocurrency platform Wormhole lost $320 million from an attacker exploiting a signature verification vulnerability.

As finance evolves, it’s imperative that institutions of every size are doing all they can to protect themselves from cybercriminals. But what does that look like in practice? Let’s examine some key actions all companies must take.

Strengthening weak links

You may not be looking for weak links in your security infrastructure – but your adversaries definitely are. A single vulnerability is an open door for criminals.

Businesses must continually search for weak links in their cybersecurity armour – such as through vulnerability management and penetration testing – to identify and strengthen these weaknesses before malicious actors do.

This is especially important as working habits also evolve, with remote and hybrid working established as the norm. These offer many benefits but can also greatly increase risk as employees access systems from numerous locations and devices move on and off networks. In fact, Verizon’s Mobile Security Index report found that 79% of mobile security professionals agreed that recent changes to working practices had adversely affected their organisation’s cybersecurity. This isn’t to say that companies should ban remote working but they need to be aware of their heightened risk and be proactive about managing it.

Educating the team

A crucial part of this risk management involves employee education. Many cyberattacks rely on social engineering techniques like typo-squatting (often used in conjunction with targeted phishing attacks) to impersonate trusted parties and fool employees into providing critical access or even direct funds. Therefore, employees at every level need to know the techniques that are being used against them and be trained in the appropriate cybersecurity response.

The way this education is delivered is also important. A one-off PowerPoint presentation won’t cut it – teams need continuous training and engaging exercises, such as attack simulations, tabletop exercises and quizzes, to ensure that crucial information is taken in.

Creating a cast-iron incident response plan

Part of protecting yourself from the damage of a cyberattack is planning what to do in the event of one.

An incident response plan is a critical part of a firm’s cybersecurity infrastructure, structuring the steps to be taken following an incident. Plans should include key contacts and a division of responsibilities, escalation criteria, details of an incident lifecycle, checklists to help in an emergency and guidance on legal and regulatory requirements. Plans can even include template emails to support communications and companies should draw on knowledge from private resources and industry experts, as well as their government’s resources, to help them create a cast-iron plan.

The road ahead for finance and cybersecurity

Over the coming years, the rate of digital change isn’t set to slow. With BigTech’s eyes on banking, traditional banks innovating to keep up with challengers, the rise of ‘superapps’ and cryptocurrency supporting the emerging metaverse – to name just a few – there’s significant change still yet to occur.

The finance sector’s cybersecurity response must also continue to evolve in order to keep up. Part of this will mean relying more heavily on AI, such as in continuously monitoring networks for threats, although this tech will also be leveraged by cybercriminals. Additionally, it will be crucial for the cybersecurity as a whole to close its skills gap: there is currently an estimated global cybersecurity workforce gap of 3.4 million people.

The future is exciting but without the right protections, it can be dangerous too. If firms are to protect their assets and customers, they must build cybersecurity into the heart of their practices. Reaping the rewards of the FinTech boom means keeping firm control of your security risk.

A low-code application development platform is a visual software development environment that empowers multiple developer personas. It uses visual development tools with drag-and-drop or point-and-click design capabilities, abstracting the code in application design and development, thus providing a simple and intuitive development environment. Low code helps to free up your IT staff to focus on more value-add tasks. It can help enterprises roll out applications with a shorter time to market with high abstraction— Utsav Turray, General Manager – Product Management and Marketing at Newgen Software

What is a low-code platform?

Low code enables enterprises to rapidly develop customized solutions and applications for multiple interfaces like web, mobile, wearable devices, etc., to automate end-to-end customer journeys.

Benefits of low code platform

1. Empower IT, Teams, for Optimum Resource Utilization:

Your IT teams spend long hours maintaining systems with periodic updates, compliance checks, and performance measurements. Low code can help you minimize this burden by automating such recurring tasks, allowing IT experts to focus on other important activities.

2. Fulfill Customer Expectations by Responding Quickly

Today’s tech-savvy customers want you to respond quickly to their needs. With these platforms, you can quickly respond to customers’ needs by developing and deploying applications rapidly. Also, you can deliver a personalized customer experience using customizable applications.

3. Enhance Governance and Reduce Shadow IT

Shadow IT is an area of concern for enterprises as it accrues technical debt and affects its overall risk monitoring. Low code offers a collaborative work environment and reduces dependencies on third-party applications. It helps reduce shadow IT through central governance and visibility.

4. Handle Complex Business Needs with Faster Go-to-market

A low code platform with well-designed functional capabilities like drag-and-drop tools helps developers handle a range of complex business and technological needs. These platforms enable faster development of complex business applications in a short period, fostering quick innovation and rapid go-to-market.

What is no code platform?

No code is a tool for nonprofessional developers. Using a no-code platform, anyone in the organization can build and launch applications without coding languages using a visual “what you see is what you get” (WYSIWYG) interface to build an application and intuitive user interface. A no-code platform often uses drag-and-drop functionality to enable development and make it accessible for organization-wide users. No code platforms are mostly directed to serve the needs of business developers who can develop applications with workflows involving fewer work steps, simpler forms, and basic integrations.

Benefits of no code platform

• With no code, organizations can work without IT interference.
• Organizations can make applications in less time and with fewer resources.
• Compared to conventional coding methods, no-code solutions reduce the development time since developers don’t need to hand-code each line of code.
• Functionality and design are more easily changeable than hard coding allows. Developers can also integrate any change easily and enhance functionalities in the applications whenever required; this helps businesses provide a better customer experience.
• No code platforms don’t require similar effort as a conventional coding approach to building applications, thus being cost-effective.

Difference between low code and no code

Working with Newgen, you’ll have access to Newgen’s low-code and no-code intelligent automation capabilities. However, both platforms focus on a visual approach to software development and drag-and-drop interfaces to create applications.

Low code is a Next-gen Rapid Application Development tool for multiple developers, whereas no code is a Self-service application for business users. The primary purpose of low code is the speed of development it offers, whereas, for no code, it’s the ease of use.

If the goal is to develop simple applications that require little to no customization and are based on improving the efficiency of a simple workflow, no code platform should be the ideal choice. An example could be order management, employee onboarding, or scheduling to improve employee efficiency.

Low code, on the other hand, is more suited to enterprise use cases. It is directed towards various personas, including business developers. Low code is more flexible than a no-code platform. An example could be Business Process Automation, Application modernization, Internal applications, and portals. Developers can work with stakeholders in all the stages of the development process, and low code can help them address complex integration scenarios, which gives an organization faster time to market.

Collaborative partnerships can remove barriers to SME borrowing, in turn boosting the global economy. In an already challenging market for businesses of all sizes, SMEs are facing the additional strain of being unable to access the working capital they need to manage cashflow, take advantage of growth opportunities or help them get through quiet periods.

by Martin McCann, CEO, Trade Ledger

The good news for SMEs – and the banks wanting to provide them with a better solution – is that the technology to resolve these pain points already exists. Companies like Trade Ledger provide the technology that lenders need in order to offer businesses fast, easy access to working capital – worthy of a digital economy.  A good example of how that is working in reality is our partnership with HSBC.  Working together, we created a digital solution that cuts the approval process for new receivables finance from up to 2 months, down to within 48 hours.

Utilising the interconnected ecosystem

Even the world’s largest commercial bank cannot do it all in-house, instead seeking agile, enterprise technology partners to fast-track digital transformation strategies and start adding value to customers sooner. We call this collaborative innovation.

Such partnerships are nothing new. Indeed ‘partnership’ seems to be something of a buzzword in the financial services industry today – thanks in part to open banking, but also Covid-19 forcing many to seek alternative solutions quickly in a time of crisis. It is encouraging to see banks, FinTechs and other payment services providers increasingly looking to build partnerships within the financial ecosystem, for the mutual benefit of both organisations as well as their underlying customers. Utilising purpose-built solutions of other providers, financial institutions of all sizes can get new solutions to market more quickly and at lower cost, helping them to remain highly competitive.

Another example of innovative collaboration is the way in which we work with Thought Machine, the cloud-native core banking technology provider. Together, with Trade Ledger’s loan origination and management capabilities, we are able to deliver a fully integrated technology stack for commercial lenders and banks. The API-driven data exchange enables a high level of real-time. Banks can now rapidly configure and launch new digital products such as asset-based-lending, invoice and receivables finance, with ease and control.

SME lending to boost the economy

By leveraging open banking APIs and data modelling to build a real-time view of the customer, banks can get a richness and quality of data that removes traditional blockers to extending credit to the mid-market and SME sectors.

I believe there is also a moral obligation for the industry to provide critical global supply chains with access to liquidity in order to fuel a global economic recovery. SMEs play a vital role in the global economy, so the industry must come together to remove the barriers that hold them back – including the inability to access external capital. Innovation happens where capital flows!

Trade is the engine that powers development and competitiveness in the global economy, thereby encouraging fairness, creativity, and productivity. When trade flows in a rules-based system, jobs, wages, and investment accelerate immensely.

By Swati Babel, a cross-border trade finance business specialist, and VP at Triterras

Trade financing supports trade at every level of the global supply chain. Trade finance makes ensuring that buyers get their products and sellers get their money by supplying liquidity, and cash flows, and reducing risks. Simply expressed, trade finance is necessary for the cross-border movement of products and services.

With the Global Trade Finance Market estimated to reach $85.85 billion by 2027, growing at a CAGR of 7.06%, it becomes an integral part of every country’s economy. The world’s vast domestic market and a large pool of skilled workers make trade finance an attractive destination for foreign investors. However, the complex regulatory environment and lack of access to financing restrict the expansion of business operations across various markets.

However, the emergence of FinTech platforms over the years is paving the way to simplify and seamlessly align the trade finance industry. FinTech platforms are providing much-needed solutions for businesses by offering innovative financing products that are tailored to the needs of enterprises. These platforms are helping businesses to overcome the challenges they face in accessing traditional bank financing, and they are playing a key role in promoting economic growth and development. The platforms provide businesses with the financing they need to grow and expand their operations and also help the businesses manage and improve their financial planning.

The role of FinTech platforms in the trade finance industry is to provide an efficient and cost-effective way for businesses to finance their international trade transactions. The platforms offer several advantages over traditional banking products, including:

• Access to capital: Fintech platforms provide businesses with access to capital that they may not be able to obtain through traditional banking channels. This can be particularly helpful for small businesses and startups that may not have the collateral or credit history required by banks. Moreover, Fintech platforms provide businesses with enhanced access to funding, which can be used to finance trade transactions. Another key advantage of fintech platforms is their ability to connect borrowers and lenders from around the world, which gives borrowers greater access to capital. In addition, fintech platforms usually have lower transaction costs than traditional banks.

• Flexibility and Cost Effectiveness: Fintech platforms offer more flexible terms than traditional bank loans, which can be important for businesses that have the irregular cash flow or are expanding into new markets. Fintech platforms offer flexible products and services that can be customized to meet the specific needs of businesses. Fintech platforms offer cost-effective solutions that can help businesses save on costs associated with financing trade transactions. Various fintech platforms have relationships with multiple lenders, which gives them the ability to get customers the best possible terms for loans and can often provide more flexible repayment terms than banks. This means that businesses can choose a repayment schedule that works best for them, instead of being tied into a rigid repayment plan from a bank.

• Agility and Efficiency: Fintech platforms typically offer a faster and more convenient application process than banks. This can be critical for businesses that need to quickly obtain financing for time-sensitive trade transactions. Fintech platforms for trade financing are a lot faster than going through a bank or other financial institution because the process is often much simpler and there is less paperwork involved. Fintech-led events and activities such as the Singapore Fintech Festival also enable an ecosystem of networking and partnerships. Because of these reasons, banks and financial institutions with sufficient capital often team up and participate with the Fintech platforms for lending/co-lending opportunities. Additionally, they also enable businesses to streamline their trade finance operations and improve overall efficiency. Innovative solutions such as AINOCR or Electronic B/L help in digitizing analog data, such as paper documents, bills, etc. These platforms provide valuable data and analytics to help businesses make informed decisions about their trade finance need and help businesses streamline their operations by automating key processes.
• Enhanced security: Fintech platforms often utilize cutting-edge security features, such as blockchain technology, which can provide an additional layer of protection for businesses and their customers. Many platforms use such next-gen technologies to protect borrower information and ensure that transactions are processed securely. This can give borrowers peace of mind when taking out a loan or making a payment.

FinTech platforms are playing an increasingly important role in the trade finance industry. By providing a digital infrastructure for the entire supply chain, from producers to retailers, they are making it easier for businesses to connect and trade with each other. This is particularly important in the current climate, where businesses are under pressure to move faster and be more agile. FinTech platforms can help them do this by streamlining processes and reducing costs. While credit assessment and due diligence should be carried out manually to avoid Trade-based Money Laundering, however for everything else, Fintech platforms are changing the landscape of Global Trade Finance.

Unless you’ve had your head in the clouds for the past few years it would be difficult not to notice the pace of adoption of cloud technologies in financial services and the capital markets.

by Alex Walker, VP, Global Network Data Sales, IPC Systems

Perhaps one unforeseen consequence of the global pandemic was that the working world in general, and financial markets, in particular, would not simply resume ‘business as usual’ the moment physical restrictions on entering workplaces were lifted. Just a few years ago the idea of virtual trading floors would have been unthinkable, given the challenge and heavy burden of meeting rigorous security, performance, surveillance, conduct and reporting obligations. However, new cloud technologies not only facilitated efficient remote trading; post-pandemic there has been a seismic shift in mindsets as to what ‘institutional-grade’ operational and business models should look like.

The benefits of using the cloud

Market participants have options when it comes to selecting the cloud configuration that best satisfies their specific and extensive requirements, from security and performance rigour to ease of integration with internal infrastructures and external counterparts. Cloud technologies, in general, offer key benefits that include a pay-as-you-go subscription model, flexibility, scalability, significantly reduced times to market, removal of barriers to entry for new solution offerings, and the ability to respond more quickly to evolving market conditions.

As a pioneer and advocate of new data distribution and communications technologies, we endeavour to understand our clients’ pain points and their key drivers of change in embracing new cloud technologies, innovation, and emerging trends. Our survey this year of 500 professional trading practitioners uncovered that there was a relatively even split of respondents favouring integration with a public cloud over single and multi-party private clouds. We find that smaller firms and retail traders tend to focus more on cost-efficient market access and leveraging the economies of scale offered through shared (public) cloud infrastructures. However, the Tier 1 banks and large financial institutions will more likely lean towards private cloud infrastructures with enhanced, stringent, and rigorous performance and security layers. The solution for the majority of financial firms will be a hybrid of traditional and cloud connections and distribution models.

In terms of front-end trading applications in the cloud, it is still relatively early as far as ‘proof of concept’ and, not least because of the weight of regulatory and compliance obligations, the trading industry remains understandably circumspect about full adoption. That said, we are seeing a steady migration to certain aspects of cloud services, and over time expect order management services – and indeed core matching functionality – to transition increasingly to the cloud.

The foundation of digital innovation

Cloud adoption offers a starting point for firms to completely rethink how they access and manage costly, high-maintenance operational resources such as network and communications infrastructure, data storage, client connectivity, etc. This shifts business mindsets beyond pragmatic ‘build or buy’ decisions to a nimbler ‘as-a-service’ business model.

The ‘as-a-service’ consumption model mitigates the cost and risk of significant direct investment in cloud connectivity and service capabilities – as well as the arguably greater risk of being left behind as new cloud technologies and applications become the standard. Along with the anticipated increase in digital data points, financial institutions will be compelled to embrace the power of the cloud to continue to stay relevant in an increasingly challenging competitive environment, particularly with respect to new, non-bank, cloud-native industry disruptors.

The everyday integration of digital technology into our lives has had a significant impact on workplace cultures and structures. Cloud technologies allow firms to be much more flexible, mobile, and innovative. The success of this approach – in terms of measurable performance and driving more cloud-led business decisions to ongoing innovation – is linked irrevocably to the robustness of a company’s connection between its infrastructure and cloud environment.

Many of fintech’s success stories are built upon businesses that would have traditionally been competitors coming together as collaborators to fix a specific problem, which has benefitted the industry and consumers alike. In today’s fast-paced environment, a ‘do-it-alone’ strategy does not always cut it.

by David Reiss, Programme Director, Strategic Partnerships, Currencycloud

Historically a key trend that has underpinned the growth of the industry has been traditional organisations such as big banks and government agencies partnering with tech-driven newcomers. Encouraging regulations and policy changes like Open Banking have helped the sector harness an ever-expanding range of technological possibilities.

Collaboration has not just been limited to fintechs partnering with large incumbents, however. Growing numbers of fintechs are partnering with one another to drive innovation and provide customers with an ecosystem of partners that know how to work and integrate together, while most importantly, meeting customers’ needs. This trend should be encouraged as it delivers multiple benefits including allowing businesses to harness smart thinking from across the fintech industry while avoiding the clashes of perspective and culture they might encounter with more traditional organisations. This isn’t just limited to the financial services sector either, with companies such as food delivery applications or mobility solutions partnering with fintechs via embedded finance solutions to offer their customers a winning product.

Two, three, or perhaps no heads at all?

Fintechs who want to partner with players from the same industry needs to make sure the partnership is aligned with their needs. While the rewards of partnerships are high, strategic collaboration requires thoughtful consideration. Depending on the product, the size of the business, or the expected outcome of their venture, there are three principal options that they should consider.

They can decide to not partner at all and build the entire product or proposition themselves. While you’ll be able to design exactly what you want, this can take a long time and a lot of money to develop and implement. Then there’s the ongoing resource required to maintain, develop and remain compliant.

Fintechs can also decide to outsource some of their needs to a single partner. This is something scaling fintechs often do to plug gaps in existing capabilities, improve user experience, and increase their go-to-market time by relying on one, often more-established generalist with a ‘broad brush’ approach.

Alternatively, fintechs could partner with multiple, best-in-class specialists, leveraging their varied skills to fuel growth. For example, a company could partner with one provider for cross-border payment solutions, another for card issuing, and a separate one for compliance.

From competition to collaboration

Whichever approach fintechs decide to pursue, in our experience there are benefits to bringing together different expertise, technology, and purpose. Here collaboration trumps competition, and as opposed to the wider world of commerce where businesses often fall victim to fierce competition, fintechs are achieving success by working towards common goals.

Further, many of the most successful fintechs are fast-moving, agile, and able to rapidly respond to change and the ecosystem’s disruptive characteristics. This flexible approach means many are pragmatic and access the pool’s diverse capabilities to meet a specific challenge when it arises.

Fintechs are also often distinct from traditional financial institutions in that their culture is inherently different. They can choose best practices and styles to create something new and compelling, which gives them an ‘open-mindedness’ towards partners and an appreciation that diverse perspectives yield positive results. Problems are easier to solve when they are looked at from multiple angles.

A good example of an effective fintech partnership is the recent collaboration between global payments platform Currencycloud, Transact Payments Limited (TPL) – principal Scheme member for Visa & Mastercard and BIN sponsor, and financial infrastructure platform Integrated Finance (IF) to deliver a unique solution for sync., the all-in-one money aggregation app. In this case sync. had a vision of creating a super app that would allow users to instantly access, manage, and view all their accounts across different banks within a single app.

Integrated Finance provided sync. with the ability to open customer accounts and move funds between multiple banks and institutions by automating its workflows and enabling sync. to connect easily to other institutions. Transact Payments Limited enabled them to issue their card via a new settlement system which allowed them to hold multiple currencies and offer them to customers. Currencycloud, meanwhile, allowed sync. to offer their customers different currencies within the app and the ability to access a global market and remain compliant. This collective know-how provided the framework for sync. to build a truly unique application and get to market in less than three months.

Alliances like these are synonymous with innovation and improved offerings for customers. For fintechs, the right choice might not always be to align themselves with legacy banks and consultancies first but to instead look to their counterparts. In an industry that offers novel solutions to customers, a partnership model can generate the energy that fuels growth, innovation, and creativity.

For many of us, the ease of accessing digital financial services, such as contactless payments and electronic transactions, is often taken for granted. However, across many parts of the world, millions of people do not have access to digital bank accounts or credit and debit cards and rely instead on cash for daily transactions and savings.

by José Cabral, Managing Director, Ria Money Transfer

In the age of globalisation and interconnectedness, more people than ever before are migrating to different countries in search of better opportunities. Many of the more than 280 million migrants around the world send money to loved ones back home. These cross-border transactions, called remittances, accounted for over $600 billion in income globally in 2021 and serve as a lifeline for many. Families receiving remittances invest them in education, healthcare, and food security.

The UK as a major remittance hotspot

Some countries around the world are hotspots for both immigration and remittances, as the two often go hand-in-hand. In the UK, over 14% of the country’s population in 2021 was foreign-born, totalling over 9.6 million people and a large portion of the job force. The majority hail either from other countries in Europe or from Asian countries such as India and Pakistan. With a significant migrant population comes a significant international cash flow; the UK is the source of billions of dollars in remittances sent annually, which make a sizeable impact on many recipient countries’ GDPs.

India is the country of origin for the largest portion of migrants in the UK, representing 9% of the country’s foreign-born population. It is also a leading recipient of remittances worldwide, and nearly 15% of UK remittances go to India. In 2020, India received over $3.9 billion in remittances from the UK alone, totalling almost 7% of all remittances sent to India in that year — only the US and the UAE had higher figures.

Nigeria receives the greatest total volume of remittances from the UK. An estimated $4.1 billion in remittances was sent from the UK to Nigeria in 2021, totalling 24% of all remittances sent to Nigeria that year. Other significant remittance flows from the UK include Pakistan, where almost 5% of the UK’s foreign-born population comes from and which received over $1.68 billion in remittances from the UK in 2020, and Poland, a country of origin to 7% of migrants in the UK and recipient of $1.14 billion in 2020.

The impact this has on economies

Remittance flows to the developing world have a powerful role in shaping local economies. Both Nigeria and India are global powerhouses with enormous economies, of which 4% and 3% respectively are derived from remittances. In Pakistan, remittances represent 8.7% of GDP, and over 6% of those remittances come from the UK. Cross-border money transfers to these regions are vital to the families who use this money to pay for food, medicine, and education, as well as to fund small businesses and make investments.

The ease with which migrants in sender countries like the UK can access remittance services has a direct impact on economic development in the regions that receive them. But those sending remittances to loved ones back home do face significant barriers, among them the cost of international money transfers. Globally, about 6% of the money sent by migrants is absorbed in transaction fees, with costs differing significantly between companies and destinations. The World Bank estimates that a 5% reduction in the cost of sending remittances would increase the amount available for migrants to send to their families by up to $16 billion per year.

Financial inclusion/social angle

One way to reduce costs and make transactions more accessible is to implement mobile solutions to send and receive money digitally. By making it easier for people to receive money wherever they are, remittances have an even greater potential to impact both national economies and individuals’ financial standing, creating greater financial inclusion. This can be especially true for previously unbanked individuals, who have their first connection to digital banking services through remittances. It can also help those who previously lived paycheque to paycheque or with irregular sources of income finally begin to put money aside.

The role remittances play in developing local economies through increased cash flows goes hand-in-hand with the social benefit they provide to the families and communities that receive them. The billions of dollars sent annually to developing countries can allow recipients to improve their standard of living through education, healthcare, food security, and savings. By giving people simplified access to finance by digital means, people across the world can achieve greater financial independence.

Imagine life without access to a bank account. If you’re able to earn a living without one -and it’s a big if – the only choice you have when buying goods and services is to pay cash in physical stores. As a result, you are limited to the stores you can travel to cost-effectively, giving you no access to deals on the web, which automatically means your money is working less hard for you. If you want to save – well, you have your mattress –  and if you need to borrow,  good luck with your local loan shark.

by Alessandro Hatami, Managing Director, Pacemakers.io

Digital banking, e-commerce and card payments have led to a dramatic reduction in the use of cash in our everyday lives. In 2019 only 23% of all payments were made using cash, down from close to 60% a decade earlier – a trend that the covid pandemic has accelerated. This move to digital financial services means those of us with bank accounts can store our money more safely;  if we lose our wallets, we block our cards and ask the bank to reissue them. If we have surplus money, we can protect it by searching online to find the most effective way to invest or save. And if we are low on funds, we generally have myriad affordable credit options available.

In short, there is every incentive to open a bank account these days. Yet, according to the most recent figures,  over one million individuals in the UK do not have bank accounts. One of the most common reasons for this is that they cannot identify themselves.

Here in the UK, national ID cards have long been controversial, with both sides of the political divide claiming they interfere with civil liberties. In more analogue times, they may have had a point. In today’s connected world, each of us leaves a trail of data across the web that third parties can exploit. What’s more, the UK has more surveillance cameras per resident than any other country except China.

After successive administrations tried and failed to address the issue, the government recently announced new legislation to make it easier, faster and safer for citizens to obtain a digital identity. Under these measures, UK citizens will be able to create a digital identity by providing their name and date of birth to a range of digital identity organisations certified as trustworthy by the Office for Digital Identities and Attributes. The government’s digital ID measures stop short of national ID cards as they believe that “there is no public support” for such a system.

This new legislation is supposed to be an attempt to balance civil liberties concerns with the urgent need for a trustworthy means of authenticating our digital selves. Yet what we have ended up with is a “digital identity souk”, where the task of authenticating citizens’ digital identities is delegated to many different organisations instead of to one trusted centralised body. It’s a bit like trying to get a passport from lots of privatised passport offices instead of from the government passport office. Under this incoming legislation, depending on why they need it, citizens could end up hosting their digital identities at multiple providers – hardly a solution that puts a stop to the propagation of personal data.

By contrast, creating a national, centralised, encrypted, trusted digital identity database which stores and allows citizens access to and control over their identity, health, finance, education, permits, and residence records, would have huge benefits. Such a system is potentially a tool for empowering consumers and preventing any abuse of their data by intrusive institutions. To address civil liberty concerns, it could be overseen by a trusted body which is completely independent of the government.

There would also need to be safeguards and guarantees provided by proper regulation and enforcement.  The EU’s GDPR (General Data Protection Regulation) has taken the first (clumsy) step in making sure that citizens are aware when their data is being used by a third party, and for the time being, the UK is still adhering to this regulation.

This proposal may well raise concerns about cybersecurity.  It’s true that all databases are at risk of being hacked. Organisations including the NHS, British Airways, TSB Bank and TalkTalk that store personal data have all experienced data breaches. By contrast, a national, centralised, encrypted, digital identity database could allow the public and private sectors to pool anti-hacking resources, making it harder for criminals to access citizens’ private data.

Importantly,  such a system would help prevent people on the edge of society from becoming isolated and allow them to benefit from services many of us take for granted. Unbanked consumers currently pay a “banking poverty premium” of £485 a year. A well-designed national digital identity database would allow less wealthy individuals to establish their identity quickly and securely.

The rest of us would also benefit from a national, digital identity database because it would allow us to prove who we are much more quickly and easily. This will facilitate our search for better financial products, allow access to fairer pricing, and help ensure we find out quickly if a product or service is unsuitable or unaffordable.

Personal data is one of our most valuable assets. A national, digital identity database that is fit-for-purpose, modern, secure and most importantly, regulated would allow us to own our information, taking back control of who we are.

The complexity involved in trade processing has, for years, put market participants under considerable strain. Navigating this landscape has proved increasingly difficult due to the number of overlapping requirements introduced in the past decade, forcing firms to constantly recalibrate their workflows.

by Leo Labeis, CEO, REGnosys

The Common Domain Model (CDM) has emerged as one of the leading technologies designed to tackle this problem. The CDM is an open-source, human-readable and machine-executable data model for trade products and processes. It creates a digital representation of contracts and events across the lifecycle of financial transactions while supporting the conversion to and from existing messaging standards. This allows market participants to achieve consistency in the interpretation and implementation of post-trade requirements.

Despite emerging as an important tool in achieving greater cohesiveness in trade processing, one of the most frequently levelled criticisms against the CDM is that it is a solution looking for a problem.

This criticism, however, misunderstands the very purpose that the CDM was created to serve. The CDM has always been the analysis of a problem before being the outline of a solution. Not making the CDM a solution to a specific problem is precisely what allows it to tackle the inefficiencies it was designed to unlock.

The CDM is not – and shouldn’t be – a solution

Solutions exist at every point of the trade lifecycle, from matching to reporting to collateral management. Some of these solutions are widely adopted by the industry, and in most cases, organisations can choose between multiple available solutions.

The problem that persists across the post-trade landscape is not about a lack of solutions – it’s about a lack of interoperability. New mandates introduced after the 2008 global financial crisis, such as clearing, reporting or margin requirements, have led to a proliferation of new processes and fragmented approaches globally. ISDA itself has recognised that the “industry’s limited resources are not always focussed on developing and delivering common solutions.”

So, the need is not for another solution – the industry already has many of these. This is exactly why the CDM is not a solution and never should be. In this scenario – if the CDM was crafted to be a solution to a specific pain point in the trade lifecycle – the model would be customised to that specific use case rather than promoting consistency and robustness.

The industry’s current approach to trade confirmation illustrates this pitfall. This process usually classifies products upfront. As a result, most downstream trade processes, for instance, clearing or reporting, are engineered based on product types, even though they may not be the relevant classification for those processes.

Before we know it, the CDM would have perpetuated the very problem that current solutions suffer from – a lack of interoperability at different points in the trade lifecycle.

If the CDM isn’t a solution, then what is it?

What post-trade infrastructure needs is the development of common foundations for the processes, behaviours and data elements of the trade lifecycle. The CDM was created to meet this demand.

That the CDM is “coded” explains why it is often mistaken for a solution, based on the assumption that code equates to a solution. It is more accurate to think of the CDM as a library distributed in multiple languages and accompanied by visual representations. That code library is directly usable in solution implementations but critically remains independent of any particular solution or system.

Digital Regulatory Reporting (DRR) – an initiative initially championed by ISDA – provides the best illustration of this separation in action. DRR delivers a standardised, coded interpretation of the trade reporting rules using CDM-based data to represent the transaction inputs.

Importantly, DRR is only an application of the CDM. It does not directly interfere with the CDM, so the latter remains free of any reporting perspective. For instance, the processing of transaction inputs with static referential data, often jurisdiction-specific, is part of DRR but not of the CDM.

Keeping the CDM as a genuine common denominator is key to ensuring its status as a pivot between different trade processes without being encumbered by any particular one.

Looking ahead

The CDM has enormous potential to foster greater standardisation across the post-trade landscape. It can work in a complementary way to any other data standards – including FIX, FpML or ISO 20022 – and can be integrated into the internal systems of market participants, enabling data to be interpreted consistently across the board.

To realise this potential, it is vital for the industry to fully understand that not making the CDM a solution to a specific problem is what allows it to achieve this harmonisation. In doing so, firms can begin to implement more innovative and strategic approaches to data management.