Finextra Research: Latest fintech news, analysis, interviews, features and opinion by industry experts

Report

The Future of Identity 2020

Technology, Security and Regulation Driving Trends of Tomorrow. Financial institutions must balance speed with security at all points of connection and communication with the customer, but while the incumbent player is known for laboured onboarding, fintech challengers are coming to the fore with slicker processes, more so now than ever before as a result of Covid-19. Identity is integral to mature digital transformation and fulfilling customer needs, especially when mandates such as the General Data Protection Regulation (GDPR) and the Second Payment Services Directive (PSD2) are too limited in their coverage and arguably introduce friction, as evidenced by Strong Customer Authentication (SCA) and Two-Factor-Authentication (2FA). Increased information exchange has also posed the pertinent question: who owns this data, when banks continue to be the trusted providers of identity and history dictates that ID solutions need a commercial edge? In addition to this, do we need to create a truly digital borderless economy? However, we are not at that stage and with verification being the first point of contact for the customer, abandonment rates are up by a staggering 40%. Banks are further along in the digitisation of infrastructure but are slow in ensuring that the same experience is provided across mobile, tablets and desktop computers. Some financial institutions are tackling this with the use of point solutions such as biometrics and analytics to maintain behavioural records, examining how customers hold their mouse, keystrokes and conducting liveness checks. In order to combat sophisticated ID scams, banks must learn how to recognise behaviour. Account takeover fraud and synthetic fraud are both growing abuses of identity and social media connectivity is increasing the number of access points for bad actors. However, banks believe that this problem can be resolved by educating customers about the risks involved with data breaches. What is the right formula? A ‘KYD’ – Know Your Device – approach. Infrastructure must be sophisticated, leveraging artificial intelligence and machine learning; the days of false positives are over. Download your copy of the report below now to find out more.

17 November 2020 262 downloads

Report

Innovate and Launch: How banks can securely leverage cloud to expand into new markets

A Finextra Research Impact Study in Association with Mambu and Amazon Web Services (AWS). The cloud can power innovation for financial institutions. According to McKinsey, 70% of banks are reviewing their core banking platforms and are beginning to leverage the potential that cloud-native services can deliver, as well as the offerings provided by technology vendors. When a bank or payments provider moves to a digital banking platform, cloud migration is a fundamental part of the process. Deloitte highlights that success with process re-engineering and efforts at digitalisation with emerging technologies such as artificial intelligence are dependent on cloud computing. Cloud migration, for any firm, is complex and no two firms will have the same journey. The key factor here for financial institutions is to collaborate with the right cloud services provider and the right technology partner. In order to stay agile, launch new products quickly and cost effectively, cloud is essential for banks and payments providers. This will even allow traditional players to compete with nimble fintech startups and well-funded financial services firms. Security and compliance are primary considerations for banks and payments services providers adopting the cloud. SaaS banking platforms that support composable API-enabled architectures allow banking and payments firms to operate like technology companies. Working with providers like Mambu running on Amazon Web Services (AWS), firms can scale their core banking business and innovate faster while operating in a secure, compliant environment. Download your copy of the Impact Study below to learn more.

13 November 2020 576 downloads

Report

Digital Transformation Accelerated

A Sibos 2020 Report produced by Finextra in association with Intel. As the global coronavirus pandemic pushed the annual Sibos event into virtual mode for the first time in 2020, it’s not surprising that everyone was keen to talk about how this has changed things in the key areas that the industry gathers to review at this time of year- technology, digitisation, innovation and the future of finance. There was broad consensus that COVID-19 has led to two years’ worth of digital transformation in just two months, as the lockdowns kicked in at the end of March. Financial institutions were affected internally, with a major emptying-out of financial centres and distribution of their IT estates amid rigorous oversight of new workflows, security practices and productivity. But they also had to react to the new expectations and behaviours of retail customers in lockdown and corporates who have themselves had to embrace remote and hybrid working for their financial and supply chain management. As the situation demanded- and continues to demand- flexibility, and economic fears push cost and efficiency to the fore, change resistors within financial services organisations, corporate customers and regulators alike have been forced to become change adopters. 2020 has been far from a positive year for many. But if financial industry and technology people are looking for a silver lining, it could be found in the results of this forced digital transformation. It will be interesting to see how much can be achieved through this accelerated change by this time next year. Download the full report below to find out more.

06 November 2020 710 downloads

Report

Payments Transformation: Immediate, Intelligent and Inclusive

The Finextra Annual Payments Survey Report 2020 in association with Fiserv. The pandemic has changed how we think about payments and the way people move and manage money. Not surprisingly, you see its influence in our payment trends this year. This year's Payments Industry Survey shows a change in focus, from the implementation of large infrastructure changes, such as instant payment systems, ISO 20022 adoption and open banking, to an emphasis on how those changes can drive value for payment users. The payment experience has become the focal point. Understanding how financial institutions can improve the services they deliver is central to the current direction of the payment industry. While COVID-19 has added impetus, the customer-centric, payment-user-first trend has been gaining prominence. Financial institutions are moving the discussion on from the provision of instant payments to focus on how they can bring value to the payment users as they interact. While the move to instant (real time) payments was a key trend identified in previous Fiserv payments surveys, as they become a reality, the attention is moving towards how they can be utilised to address the evolving needs of payment users and support payment users who traditionally use nonelectronic forms of payment. This year, the survey focused on two areas: The role that overlay services have in addressing the needs of payment users. Inclusion of all payment users in electronic payments. Download the report of the results from the recent Finextra Annual Payments Survey 2020, by Finextra & Fiserv, below to learn more.

04 November 2020 1139 downloads

Report

Can Strong Customer Authentication open the door to new end user experiences?

Much has been discussed about the European payments industry's mandated shift to Strong Customer Authentication (SCA). The technical demands, constraints and consequences for the various parties involved in the chain, from the issuers and banks large and small, to the end user, to merchants, are far-reaching. The challenge of implementing SCA alongside myriad other projects such as digital transformation journeys, migration and compliance deadlines and generally trying to re-hone businesses in a time of great flux, are reflected in the extension of the deadline for SCA. Yet the user experience is undoubtedly the biggest challenge around implementing SCA. What the industry needs is a more compelling perspective, an incentive beyond compliance with the promise of new customer journeys and services that may emerge from the shift to SCA. Download your copy of this Finextra white paper, produced in association with Okay, to learn more.

30 October 2020 565 downloads

Report

Personalisation-as-a-Service: Harnessing Data in the Banking and Payments Industry

A Finextra Research Impact Study in Association with FICO and Amazon Web Services (AWS). As customers increasingly experience more consistent, personalised treatment from companies across a wide variety of industries, it is natural for them to expect—and require—the same of financial services providers. Consumers do not want disjointed experiences across auto loans, credit cards, and HELOCs any more than they want them when shopping for different categories within the same online retailer. Aside from consistency, 84% of customers revealed that being treated like a person, not a number, is important when winning and retaining business. That’s according to Accenture Global Consumer Pulse Research, which also found that 73% of consumers expect specialised treatment for loyalty and anticipate rewards for past interactions, as well as for sharing their preferences or personal information. However, only 22% believe that customer experiences are tailored effectively by organisations, and 50% fewer consumers perceive their bank as a trusted partner today than in 2018. Thus, there is a significant opportunity for savvy financial services companies who can meet consumer expectations. At the same time, financial institutions that fail to satisfy those standards are in jeopardy, as customers are re-evaluating their choice of financial providers given an increasingly diverse and non-traditional range of alternatives. Ultimately, consumers want financial providers to offer personalised services and integrated offers that address their most relevant needs at the right time, such as when they are buying a car, getting married, purchasing a home, continuing their education, etc. The financial institutions that can anticipate customer needs and deliver service that is personalised and consistent across channels will be well positioned to thrive in the digital age. Download your copy of the Impact Study below to learn more.

30 October 2020 524 downloads

Report

The Tipping Point of Cloud and Risk Management in Capital Markets

A Finextra Research Impact Study in Association with Numerix and Amazon Web Services (AWS). Capital markets firms are acknowledging that the cloud is a catalyst for establishing competitive advantage and the financial services sector has been taking steps to prioritise digital transformation. To meet customer requirements and remain competitive, financial services organisations must increase their agility, reduce time to market for new products and services, and address the spiralling total cost of ownership (TCO) of their IT infrastructures. Today, it is evident that all roads lead to the cloud. Download your copy of the Impact Study below to learn more.

05 October 2020 435 downloads

Report

Increasing Resilience in Collaborative Financial Services

Data is the lifeblood of every business. In the rapidly evolving ecosystem of financial services, the establishment of a robust and efficient cloud-based information management platform to govern this data is integral to a firm’s ability to remain resilient in uncertain times while building market share. While the financial services industry increasingly leverages the value of data, the way in which it is collected, stored and deployed is evolving to keep pace with customer expectation, regulatory demands and seismic innovation in technology. Collaboration between banks, partners, customers, or third-party providers represents a key shift in financial institutions’ approach to data, yet, ensuring the systems that are in place work to both protect and share data between these players is challenging to navigate. Building cloud-based information management systems from the ground up is often an unrealistic premise, particularly in financial services. Firms operate with pre-existing systems, and the reality remains that these legacy systems will build the backbone or springboard from which resilient information management systems will emerge. It is vital that firms understand the need to collaborate with external providers to extend the availability of this data across diverse hybrid environments if they are to effectively implement these technological advancements. Directives and regulations pushing banks to open access to their information assets puts a hard deadline on the calendar for such projects and means that those which act early can benefit from being first to market with solutions that not only meet compliance requirements but capitalise on new opportunities. Interoperability is a fundamental tenet of this collaborative ecosystem. It is the ability of financial institutions to work collaboratively with providers to deliver this type of efficient, secure and resilient data management platform which will determine their success in this new information-sharing climate. Download the full white paper below to find out more.

16 September 2020 84 downloads

Report

The Future of Fintech 2020

Disrupt, reset, re-launch. The fintech industry has evolved from competing and collaborating with banks and has now entered a new era of partnerships, with those at the forefront of digital transformation prioritising technology and legacy participants working with new financial players. In addition to this, traditional financial institutions are partnering with challenger banks to provide refined products and services that attest to putting the customer first. However, questions have been raised about how an alliance with a neobank would be preferable to a merger or an acquisition. The concept of a ‘challenger bank’ will also be examined in this report, and why, after years of development and progress, it has become difficult to differentiate between the vast number of neobanks in the industry because their offerings are vastly similar. Finextra’s The Future of Fintech 2020 report will explore how banks have embraced innovation and what benefits have emerged from establishing technology initiatives, partnering with neobanks and investing in fintech firms. Further, the report explores what and how the industry should behave in the face of a crisis and how to bounce back stronger than ever. We will also consider whether customers would benefit from financial institutions merging all their services onto one application as the digital age welcomes the platform ecosystem, which has seen success in Asia and is being gradually implemented in Europe and the US. Download your copy of the report now.

03 September 2020 959 downloads

Report

Sustainable Finance Live - Investment and Asset Management ESG Solutions

A Visual Record from the Sustainable Finance Live workshops. In June 2020, Finextra Research welcomed industry experts to Sustainable Finance Live, the first virtual, interactive workshop to discuss how financial services firms and technology companies can achieve the UN’s Sustainable Development Goals (SDGs) by 2030. Debunking the myth that revenue cannot be generated through trustworthy implementation of ESG measures, this co-creation event targeted the subsector of investment and asset management and explored specific challenges and opportunities, following a lean back, lean in and learn model. The workshop defined what investors require in order to track and securitise with confidence and what asset managers need to build portfolios that institutional investors will select. Diving deep into the practical challenges of investment and asset management, the sessions considered data access and reporting, with speakers providing advice on how to embrace sustainable finance. With a top down approach, a clear focus of the sustainability components and trying to infer the process of assessing the following, the workshop focused on: The investment gap in new technologies and models Information acquisition through third party suppliers to help the risk function Incentivisation schemes to promote better sustainability norms The role of technology in validating ESG activities Download the full report below to find out more.

27 July 2020 271 downloads

Report

How to Prevent Payments Fraud amid Global Disruption

Economists predict the disruption caused by the coronavirus pandemic will be felt well into 2021. Banks have been left vulnerable and have to contend with fraudsters who are using Covid-19 as an opportunity to commit financial crime, exploiting consumer fear and the increase in digital payments. Fraud losses need to be anticipated and prevented as banks move from the lockdown to the recovery phase. What must be done to ensure the secure use of alternative payment options? In the age of open banking and real-time payments, funds can be transferred to fraudsters’ accounts immediately and the victim does not notice suspicious movements until it is too late. It is evident that with faster payments methods, the benefits for consumers far outweigh the disadvantages, but hackers will continue to exploit this area. Fraud analysts within a bank must pivot and adapt to working in a new environment to ensure that teams integrate efficiently and decrease human error through a lack of physical communication. Data is a vital tool in a bank’s armoury and must be considered an asset. AI and machine learning can also play a part in fraud and financial crime prevention, consuming disparate unstructured data and creating structured insight and conclusions. Coupled with traditional fraud techniques, banks need to pivot their payments fraud strategy to a tech-driven approach. This research paper by Finextra, in partnership with Feedzai, gathers the views of several experts from Bank of the West, Barclaycard Payments, HSBC, ING, Nationwide and Nordea on how to prevent payments fraud during a pandemic. Download the full report below to find out more.

16 July 2020 635 downloads

Report

Onboarding next steps for new and established Digital Banks

Customers want the onboarding and account opening process to be as easy as possible. A certain amount of friction is to be expected when it comes to identity and security checks, reassuring them that their prospective financial service provider takes security and their data seriously. Signing up for a new financial services product shouldn’t be as simple as providing a username and email address. But nor should it always require reams of paperwork, branch visits and forms signed in triplicate. In the past five years, banks of all shapes and sizes have invested significantly in streamlining their processes so that the regulatory checks such as Know Your Customer (KYC) and Anti Money Laundering (AML) can be met while minimising, where possible, the number of postal and in-branch interactions required for establishing identity and product suitability. Depending on the market segment and product, this process can be done 100% online and ideally via a mobile device – a channel that now dominates for even traditional banks with established, older customer bases. Digital onboarding is just the start, however. Banks, both new and established, are looking to improve the integration of identity at onboarding with ongoing authentication credentials, and adopt a risk-based approach to security throughout the customer lifecycle that can adjust the balance between protection and convenience for customers. Download the full white paper below to find out more.

14 July 2020 838 downloads

Report

Is Request to Pay the System for a World of New Norms?

With faster payments going live in the UK in 2008, one could regard the decade-long recovery from the financial crisis as being a journey towards realtime payments. The last few years has also seen the advent of Open Banking, firstly in the UK and subsequently across Europe and elsewhere. Request-to-pay (RtP) is an example of harnessing Open Banking to serve financial institutions, SMEs and consumers in removing some of the frictions relating to sending and receiving payments for lenders, businesses and individuals. Ahead of its introduction later in 2020, RtP was billed as an integral tool to the transformation of the payments landscape across the world. RtP is being widely promoted in the UK, Europe, the Nordics and the USA, all of which have active industry programmes. This paper will explore the opportunities for lenders, businesses and consumers provided by RtP as well as the hindrances and challenges that would need to be addressed to move to widespread adoption. Download the full report below to find out more.

13 July 2020 973 downloads

Report

Shifting to the New Normal in Card and Digital Payments

It is an interesting time for the cards industry and for issuers there is a similar narrative to that of legacy banks and digital transformation. There have been several drivers of innovation in recent years, very much accelerated by the current pandemic and the various demands and transitions that have been wrought on the entire industry in different ways, as well as on the consumer and client base. What are the key factors for survival as competition increases and regulatory compliance bears down on security measures around customer data and fraud as well as on a looser and more empowered user experience? Utilising new data that can be more easily captured and carried with transactions can inform and shape new services, and better overall understanding of customer behaviour, leading to increased personalisation and an array of added features. As integration into retail commerce platforms and an increased demand for frictionless and invisible payments takes hold, is the physical card becoming obsolete or can issuers create new propositions to retain their position? Competition in the cards industry has evolved from terms such as interest rates and fees, to balance transfer products, to loyalty and rewards and more recently has been diversified by new fintech providers. This research paper by Finextra, produced in association with FIS, is based on several interviews with cards industry experts, to formulate a view on how issuers can compete in the digital world as payments continue to proliferate and fintechs disrupt the status quo. Download the full report below to find out more.

07 July 2020 891 downloads

Report

Charting a Core Transformation Roadmap to a Future Unknown

The bulk of critical and sensitive data are kept in a bank's core. Today's core needs to process and operate in real time, and support multiple digital channels. There are different routes and many factors that need to be considered, such as budget, workforce skills, and huge cultural change in terms of new working methodology and enterprise-wide buy-in. Where the firm wants to focus its goals in the new digital world it inhabits, and on what core tenets it wishes to compete inform the transformation decisions the bank makes. Finextra interviewed several industry leaders on the subject of core transformation and what it takes to build a future-proof bank, discussing the approach to change and the management thereof, the use and deployment of new technology and cloud services, how strategic partnerships can play the most valuable part, and crucially, how to deconstruct and rebuild a business while answering the demands of real-time digital client services and a yet-to-be-determined future. Download the full report below to find out more.

24 June 2020 979 downloads