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

Report

Open Banking powered by the Cloud, Democratising Finance at Scale

As new business models emerge with recurring revenue in the innovative payments sector, traditional banks are looking to utilise open banking and open finance to assist with their digital transformation. Consumers need real-time, instant, and faster payment capabilities, and with open banking, PISPs are providing alternative methods of payments with a single API connection. Whether banks are providing alternative payments methods or not, this shift to a digital economy will continue and will result in an attraction to a platform where financial data can be used to offer value-added services to other industries. By utilising APIs, financial institutions can implement open finance solutions to improve the customer experience and offer customers greater product choice and control over their finances and data. With a cloud provider, customers can build APIs across multiple microservices that interact with third parties quickly and connect with them in a simple way. Fintech firms have developed open finance solutions that complement cloud-based open API platforms and provide the solutions financial institutions need. With the cloud, financial institutions can scale APIs on demand, pay only for what they consume, and build modern serverless architectures. Building open finance solutions on the cloud requires minimal capex and investing in this technology today will help financial institutions get a step ahead of industry peers. Download this Finextra impact study, in association with Amazon Web Services (AWS), to learn more.

28 October 2021 546 downloads

Report

Five Factors to consider when building Operational Resilience

The term resilience is receiving a significant amount of airtime in 2021. While the pandemic certainly pulled into focus the need for resilient systems across financial services, the push toward financial resilience was first born in response to the 2008 financial crisis. Since 2008, focus has shifted toward building resilience across operations in the financial services sector, by assessing vital business functions, setting levels of tolerance that these functions can withstand, and testing the tolerances at regular intervals. The Basel Committee on Banking Supervision defines operational resilience as the ability of a bank to deliver critical operations through disruption. This ability enables a bank to: Identify and protect itself from threats and potential failures; Respond and adapt to – as well as recover and learn from – disruptive events. Unlike typical risk management or more traditional compliance-based approaches, when it comes to operational resilience, banks should assume that disruptions will occur – and consider their overall risk appetite and tolerance for disruption. In the context of operational resilience, the Committee defines tolerance for disruption as the level of disruption from any type of operational risk a bank is willing to accept, given a range of severe but plausible scenarios. While the ability to predict which areas are likely to cause disruptions was once the purview of a human supervisor, given the shift to digital operations, it is only logical that firms employ tools such as artificial intelligence (AI) and machine learning (ML) to identify patterns and risks within an institutions’ complex technology systems. This Finextra impact study, in association with BMC, outlines five key considerations that financial institutions must be aware of, ahead of impending regulatory deadlines, as well as the technology-based solutions available to assist them in building a robust and compliant operational resilience strategy.

12 October 2021 252 downloads

Report

Core Banking on the Cloud - The Catalyst for Innovation, Agility and Efficiency

Traditional core systems that assume a branch interface and retain human-led back offices no longer meet needs. To be truly agile, banks must prioritise interoperability and automation through digital channels to stay competitive and avoid irrelevance. With this focus on digital transformation and initiatives such as open finance, banks are adopting a buy approach to software and infrastructure, especially when running core business applications on the cloud. Today, banks do not have to build customised software when providers have plug and play solutions readily available. Software providers have historically deployed a maintenance model where their customers opt for per-user licenses for a particular service. Now, with SaaS, software can be centrally hosted and delivered through the cloud. In addition, many providers are leveraging AI and ML capabilities, and embedding enhanced omnichannel features. This enables banks to optimise, tailor and deliver consistent customer experiences across digital channels, remove friction, and develop deeper trust. As new technologies open up data streams to and from third parties and emerging startups, banks will be able to offer their customers a range of new products, services and insights that will not only optimise customer experiences, both online and offline, but will create highly personalised, customised relationships. Download this Finextra impact study, in association with Amazon Web Services (AWS), to learn more.

07 October 2021 534 downloads

Report

Prepare to Choose: 4 factors Banks must assess before committing to a SaaS Provider

Most banks' digital transformation journeys are well underway, and the need to now deliver on their strategy milestones means that time is of the essence. A recent survey by The Economist Intelligence Unit (EIU) and Temenos found that just under two thirds of banks see new technologies as the greatest driver of change for the next four years, up from 42% from three years ago. While the momentum toward digitalisation of financial services has grown significantly during the past 18 months, financial institutions are increasingly recognising the value of Software-as-a-Service (SaaS) solutions in delivering new products and meeting customer expectations. Central banks are also increasingly showing their appetite for and recognition of the fundamental role of cloud-driven SaaS solutions in financial services. In mid-2020 the Bank of England announced its search for a technology partner to help build out its public cloud platform, while the Bundesbank recently began encouraging German banks to focus and adopt SaaS solutions enabled by cloud computing. Banks have refined their SaaS strategy beyond non-core offerings such as payroll or HR-related tools into more comprehensive, cloud-centric strategies. Covid-19 has served to accelerate adoption in core banking technology. SaaS is attractive to financial institutions looking for fast, agile solutions, because they are able to consume the required service instead of having to buy, install and maintain a suite of software independently. Rather than building in-house, financial organisations are looking specifically for resources that will speed up their attempts to innovate and scale at pace, and engender independence where suitable, all the while bolstering compliance regimes from the heart of operations throughout its entire API network. In order to have confidence that the correct SaaS provider is being selected, it is vital for banks to drill down and assess the factors which make SaaS attractive from a business perspective in the long and short term. Banks must consider whether its core offering will enable business continuity, optimise business outcomes and help the bank reach its regulatory obligations. Above all else, SaaS providers must provide certainty that their solution will not hinder or threaten business functionality in any way. This Finextra impact study, in association with Temenos, will outline four fundamental factors for banks when considering a SaaS solution, in order to position a financial institution’s business offering for success.

22 September 2021 512 downloads

Report

Addressing tech skills shortages in financial services

As digitisation increases within banking, financial services and insurance, tech leaders are faced with the task of aligning skills to strategy. Ensuring the learning and development function is positioned in line with business strategy is therefore of paramount importance. Regardless of how much emphasis is placed on acquiring technology solutions and understanding how best to utilise them, if employee training is not aligned with the organisation’s needs, progress will not be made. Homing in on business goals is an efficient starting point. Only then can outlining clear key performance indicators (KPIs) in an intentional manner support the talent strategy. By communicating a business goal to employees and requesting their feedback, talent management can be bolstered by considering behavioural traits, in addition to cultural fits - hiring strong candidates who can make smart decisions. Employers must be asked: what business outcomes do we expect technology skill development to deliver for us? Download this Finextra impact study, in association with Pluralsight, to learn more.

14 September 2021 283 downloads

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Competitive Advantage through Cloud Connectivity

Why NaaS is the smartest path to realising Financial Services Innovation in the Cloud. Many financial services firms are still making the shift from their legacy environments to more agile ways of consuming and running IT. Networking is one of the most critical aspects of this transition. It’s the backbone that connects all parts of an organisation and its data, as well as its wider ecosystem of partners, providers, and customers. The speed, reliability, and flexibility of the network directly impacts financial players’ pace of innovation, as well as their ability to provide highly available, customer-centric services. The challenges and limitations of traditional networking are clear in our virtualised, cloud-enabled, data-driven world. It’s slow to provision, expensive to maintain, lacks flexibility and integration, and can’t scale effectively to handle big data sets and analytics workloads. The need to modernise and simplify networks is an imperative for financial services organisations as their infrastructures become more complex and they develop their multi-cloud and hybrid-cloud strategies to support business transformation. Network-as-a-Service, or NaaS, enables financial services organisations to maximise the potential of the cloud as part of their digital transformation. It provides the future-proofed networking foundation that allows innovation and competitive differentiation. Download this Finextra impact study, in association with Megaport, to learn more.

06 September 2021 173 downloads

Report

Managed Services: Helping Banks refocus on Innovation and Growth

Key concerns such as security and compliance are often cited as barriers to banks adopting managed services. In fact, the managed model can deliver significant advantages in these and other areas. It’s important to understand how today’s services providers contribute more than just piecemeal solutions to individual problems. Managed services is about creating a partnership that focuses on outcomes, and adopting the latest technology continually to turn pain points into competitive advantage. Download this Finextra impact study, in association with Finastra, to learn more.

03 September 2021 280 downloads

Report

Corporate Mobile Banking and the Road to Omnichannel

Innovation is picking up pace in treasury management, but development is far from the fintech revolution that has replaced outdated technologies and streamlined antiquated practices in retail banking. While there is an appetite amongst treasurers to remedy historic shortfalls, continuous improvement in operational treasury efficiency has been the biggest hurdle. International payments continue to be an expensive and burdensome process, multi-currency accounts cannot be accessed, can only be operated manually, and take weeks to open – even though very few organisations operate using a single currency. Mobile banking can alleviate these pressures by removing geographical limitations and in turn, improving efficiency and productivity. Considerable time has also passed since supply chains and banks had to ascertain how to pool cash and conduct trade across multiple nations, currencies, and continents for the first time, which is unacceptable in this real-time age of payments processing. Mobile services can remedy these issues by accelerating collection, refining reconciliation, and eliminating a significant portion of risk. Here’s how.

23 August 2021 340 downloads

Report

Cost of doing business as usual or an avoidable drain on margin?

Operational loss events related to Execution, Delivery and Process Management (EDPM), and Clients, Products and Business Processes (CPBP) can represent the most financially damaging losses for banks. Yet these often fly under the radar of more PR-friendly talk around cybercrime, money laundering and fraud defences. There is relentless pressure for revenue growth, client acquisition and flow. But margin is just as important, if not more so. Every operational loss event that occurs because lessons have not been learned from previous failures, is a direct and significant hit to margin. While risk management departments might be aware of the scale of the problem, how many people working in data reconciliations, operations or IT could tell you the average cost of a loss event? How much focus is being directed from the board and C-suite to make sure that operations have what they need to improve data quality and flow, introduce intelligent automation and remove manual touchpoints and opportunities for failure? This Finextra white paper, produced in association with SmartStream Technologies, examines what more can be done to translate operational risk measurement into operational and financial margin improvements, and the barriers to overcome.

19 August 2021 193 downloads

Report

SMEs Front and Centre

How business needs are driving (Instant) Payments Innovation. According to the World Bank, Small and Medium Enterprises (SMEs) and businesses account for the majority of commercial companies worldwide and are important contributors to job creation and global economic development. Contributing up to 40% of national income in emerging economies, they represent about 90% of businesses and more than 50% of employment worldwide. SMEs will play a particularly important role in the post-pandemic future as human ingenuity and the need to secure a living income will drive new enterprises forward. Technology will be a vital part of that process, with entrepreneurs looking for new ways to meet customer needs for products and services. The opportunity for financial institutions will be to harness the potential created by the growth in SMEs with modern payment rails, and providing value-added services that reflect the needs of the evolving SME segment. Rather than the current product-centric approach, financial institutions need to find ways to establish themselves at the centre of how a business operates, not just enable it to pay or be paid. As payments capabilities are commoditised, FIs’ income from providing such services is eroded over time, making it even more compelling to understand and serve their business clients’ needs. The key is to understand how very different SMEs operate, and what they expect from their FIs. SMEs increasingly are disposed to rely on software-as-a-service (SaaS) models to run their businesses, whether that’s cloud-based finance or outsourced HR and payroll services. They don’t have the large data centres, in-house experts, or technology infrastructures that large corporates invest in, but they do have the same technology needs to support their business and to use data analytics to take the uncertainty out of their financial futures. This white paper from Finextra, in association with Fiserv, will focus on the problems and challenges SMEs grapple with, and how they can operate more effectively when armed with the right toolkit. Such use cases will demonstrate the products and solutions FIs can create with the power of instant payment rails and overlay services.

10 August 2021 524 downloads

Report

Stemming the tide of Social Engineering Scams with Behavioural Insights

Fraud and cybercrime are always on the increase, evading the latest security conventions and morphing into a different approach, following the money. In the same way, banks and financial organisations worldwide need to continuously respond and adapt. Global events create new trends and directions for fraudsters to exploit and the recent Coronavirus pandemic is no different. Social engineering fraud has gripped the industry in the last year and in particular, phone and business email scams seem to be resulting in the highest losses; indeed, according to the US Federal Trade Commission, 77% of fraud complaints reported by consumers in the US involved contact by phone. In the UK, it is more commonly referred to as Authorised Push Payment (APP) fraud, and while measures have been introduced, such as the Contingent Reimbursement Model (CRM) code and Confirmation of Payee, to protect consumers and to detect and prevent scams and illicit funds transfers, more needs to be done in the UK, and globally. The good news is banks can access and utilise increasingly sophisticated technology and expertise to meet the fraudsters’ aptitude, analysing behaviour patterns, for example, to uncover social engineering scams. Behavioural insights can be used to inform new strategies and respond to attacks in real-time where other security controls have failed. With large losses becoming increasingly publicised, and hence reputation brought into question, the industry must respond, and it is incumbent upon all players to collaborate and be proactive around accountability and prevention. This research paper from Finextra, in association with BioCatch, explores the recent uptick in social engineering attacks globally, and how banks can respond using the latest technology and security measures.

06 August 2021 223 downloads

Report

Love Change: The Dynamics of Modern Leadership

Change in financial services has become a differentiating factor. With that, the facets of leadership have and are still evolving, with a refreshed focus on the dynamics and instruments of change within organisations. The pace of change is a different proposition now than it used to be. The confluence of technology advances, which continue to occur exponentially, and consumer demand in combination with market and regulatory pressures give the context for the very real challenge of agility for financial institutions (FIs) of all sizes. This means in some cases wholesale transformation of traditional structures, hierarchies and business models, away from not only legacy technology stacks and systems, but also from endemic siloed cultures. Architects often say it is easier to demolish and start anew but with live running workforces and global operations in train, transforming an enterprise on-the-go requires astute and reasoned methods and a considered approach. It goes beyond placing the focus on technology, as the industry is wont to do. What are the core tenets of change and transformation? How does one effect change, enterprise-wide and what are the real dynamics of modern leadership? It takes the vision to identify processes that are redundant or limiting, for example longstanding Key Performance Indicators (KPIs) may be redundant within new business and operating models. Or the way in which teams interoperate and report may need to be adjusted; upskilling is likely a contributing factor; HR and recruitment parameters need likewise to be taken into account. The instruments with which to change course need to be clearly and realistically set on course, but what else is required in order to inspire and influence. Is failure indeed required in order to succeed? This report from Finextra, in association with Mambu, engaged several industry leaders from a range of financial services organisations, to address the dynamics of modern leadership and what it takes to succeed and orchestrate change, not only once but as a constant.

06 August 2021 310 downloads

Report

From Surviving to Thriving: Digital Customer Engagement beyond Video Conferencing

During the Covid-19 pandemic, and ensuing national lockdowns, one of the key challenges for financial services professionals involved in customer or client advisory has been ensuring a smooth digital migration – and that consumers are adequately served via video conferencing solutions. Now that the industry has largely adjusted to this ‘new normal’, it is time for those across the retail, private banking, and insurance sectors to think about how to further upscale their online customer journey, client service, and Know-Your-Customer (KYC) processes, by adopting an innovative, omnichannel, digital customer engagement solution. By providing easier online access to financial guidance and advice for existing clientele, financial players assume a more customer-centric approach, which can result in improved customer retention, increased revenues, and maintenance of marketshare. Download this Finextra impact study, in association with Unblu, to learn more.

29 July 2021 206 downloads

Report

Responding to Lending Disruption

Building an ecosystem and new business models. The lending market has been ripe for disruption for some time - and now COVID-19 has exposed the laggards, brought innovators to the fore, and accelerated trends that were already in motion. The global pandemic also highlights just how important lending is – it is critical to keep the economy going - and how lenders need to be responsive in a crisis. Disrupters are making existing processes better (or revamping/replacing them altogether), creating new business models, and targeting new customer segments. In these unprecedented times, traditional lenders need to respond and future-proof their business. Maintaining the status quo is not an option. On the demand side, consumers now have higher expectations of their lenders. After months of lockdown and moving their lives online, consumers expect the same convenience from their lenders as they get with Amazon, Netflix or Zoom. The user experience should be slick, decisions quick, and delivery instant. As banks respond to the disruption in the lending market, and learn from the fintech companies that do this better, they will also have to adjust to the new normal of working remotely. All banks have had massive increases in customer queries as the effects of the pandemic have taken hold. In the UK, for example, the government introduced measures that meant individuals could take a payment holiday of up to six months on their mortgages and other personal finance products. Lenders were inundated with requests, and some found their legacy systems creaking at the seams. While some lenders have struggled, the pandemic is also providing opportunities for nimble plays. Fintech company Kabbage, for example, created a gift certificate programme to help small businesses with their cash flow to tide them over through the worst of the pandemic. Businesses can sell gift certificates through Kabbage Payments, which can be redeemed at any time, with the funds deposited in their accounts the next working day. Last year Kabbage announced a tie-up with Facebook so that businesses could get a wider audience for their certificates by listing them on the social media platform. Download your copy of this Finextra white paper, produced in association with FIS, to learn more.

27 July 2021 604 downloads

Report

Driving successful Cloud Transformation

Capital market firms face the challenge to evolve at pace with technology, so that they're able to innovate and adapt to the customer’s needs quickly. Cloud is seen as a key enabler to their digital future, however cloud adoption isn’t just about IT infrastructure. How can executives develop a holistic approach towards cloud modernisation to ensure their investments pay off? As ‘digital’ engulfs business strategies, large-scale financial services players need to develop smarter ways to adapt and accelerate technological change. They are also under constant pressure from fintechs operating on agile systems, rolling out products and services at speed. The pace of innovation at large firms often suffers due to the scale of operations, monolithic tech infrastructure, ‘people alignment’ and old ways of working. Challenges brought about by COVID require even greater levels of resilience and agility to navigate. More firms than ever are using cloud-led modernisation as a catalyst for holistic enterprise transformation, and crucially, this should lead to adaptable business models that can sustain growth and weather future uncertainties in an ever-changing milieu. To maximise the value from investment, operating models need to align closely business and tech strategies. A democratised approach needs to be implemented enterprisewide and with that, a portfolio management approach to balance the long-term evolution of the underlying platform whilst pursuing growth with new products and features. Technology modernisation is also an enabler for lean product management practices such as low-cost rapid experimentation for exploring and exploiting innovative opportunities. Organisational, as well as technological change is needed to ensure teams can tap into the acceleration and agility that cloud-based architecture promises. Organisations need a mind shift- moving from a top-down decision culture to an empowered agile workforce that can continuously deliver on strategic business outcomes. This research paper from Finextra, in association with Thoughtworks, is based on interviews with senior leaders on their plans and challenges around digital programmes and cloud modernisation.

15 July 2021 338 downloads