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

Report

The advantage of Machine Learning in preventing fraud

Accurately identifying customer behavioural trends and proactively preventing payments fraud and other criminal activity at the outset can be done with machine learning. Ingesting tens of thousands of complex signals and analysing patterns to monitor activity is more effective than blocking transactions based on hard-coded and antiquated rules. Fraudsters can learn to circumvent these, and trusted users are put at risk, which is why embedded machine learning algorithms can be valuable. Download this Finextra impact study, in association with Sift, to learn about: Payments fraud and how machine learning is being leveraged today, Account takeover fraud, the biggest future threat to banks, and Synthetic ID fraud, the next opportunity for machine learning.

17 June 2021 390 downloads

Report

Identity verification’s integral position in evolving digital transformation

Eliminating friction by enhancing onboarding processes with efficient identity verification is of paramount importance to the success of a financial institution. While data can bolster streamlined onboarding and verification, it can also support the delivery of actionable insights for the creation of personalised services. This establishes a comprehensive view of the customer, increases loyalty, boosts sales, and generates revenue. Therefore, in an increasingly competitive market, the transformation of user experience must be prioritised, and identity verification is central to that objective. Download this Finextra impact study, in association with Jumio, to learn how to: Establish a competitive edge with efficient onboarding, Reduce abandonment rates, Utilise biometrics, facial recognition, and AI, Ensure a positive, seamless user experience.

15 June 2021 326 downloads

Report

Five Business Benefits for Analysing and Combatting Fraud

A Finextra Research Impact Study in association with Aerospike. With increased financing options at point-of-sale, card-not-present transactions, and contactless payments, comes a resultant surge in fraudulent transactions and financial crime. This increase in digital fraud has been catalysed by the recent Covid-19 pandemic-induced shift to online banking and commerce. Now more than ever, financial institutions must implement payments authentication processes to prevent the long-term risks associated with fraud, including slimming margins and reputational damage. One way financial players can stay ahead is to analyse all available historical and real-time data, and apply artificial intelligence (AI) and machine learning (ML) tools – which encompass a range of algorithmic approaches that derive from statistical methods such as regressions and neural networks – to decipher legitimate transactions from the illegitimate. There are, however, five further business benefits to understanding customer risk profiles. Actionable insights derived from fraud profile analysis can help banks visualise each customer, not as a collection of disassociated data points, but as a mosaic, made up of different characteristics that merge to provide a comprehensive view. This can lead to complex, holistic, and predictive analysis of customers’ behaviour – generating consistent and tailored services. Download your copy of the paper below to learn more.

20 May 2021 218 downloads

Report

Corporate Onboarding: Will it become a competitive differentiator for banks in a real time world?

The way in which banks onboard corporate clients can impact many aspects of their business, from reducing time to revenue, to improving customer experience and loyalty, and to compliance with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations. The accuracy of data used for onboarding customers is therefore a key differentiator for banks. Relying on primary source data that is legally compliant contributes to compliance peace of mind, while banks can make better decisions based on compliant data that is 100% accurate and continuously updated. This is particularly important in the world of corporate onboarding, where vetting a company can be time and resource heavy, and a complex task with many moving parts. Accessing regulated and authoritative data from company registries to onboard a client in a timely manner is a complicated process that involves a series of manual checks. There are continual updates to regulations to comply with, such as the requirement for ongoing monitoring within the 5th Anti-Money Laundering Directive (5AMLD) as well as due diligence in ensuring that company data for KYC checks is up to date and accurate. From a business perspective, banks are keen to onboard new customers as quickly as possible to maximise income and profit. An efficient process can also be a crucial differentiator in procuring loyal clients for a lifetime of service. Expectations for a real-time experience are growing in the corporate environment, just as they have in the world of retail and consumer banking. This white paper explores how banks can deal with changing KYC regulations and the incoming 6AMLD; what technology can be utilised to assist banks achieve seamless corporate onboarding; and what stands to be lost, and more significantly, to be gained, with a seamless real-time onboarding experience. Download your copy of this Finextra white paper, produced in association with Kyckr, to learn more.

16 March 2021 758 downloads

Report

The Future of Regulation 2021

Resetting the rulebook for 2021 2020 was a year of rule-breaking, 2021 is the year to reset the rulebook. Unable to grow unchecked, the regulatory framework within which innovation has been trying to flourish has shown its creaky joints, ill-equipped supervisory mechanisms and outdated mindsets. Yet, despite early concerns and predictions that Covid-19 would hinder progress across the payments landscape, the monumental shift toward reliance on digital payments has instead lit a fire under financial institutions and the regulators which oversee them. The pandemic presented unmatched challenges to the global economy, including the provision and regulation of digital financial services and fintech activities across both advanced and emerging economies, but innovators were quick to pick up the reins, and presided over a proliferation of tools and products catering to those most in need. Open banking continues to evolve, and as Open X takes hold, the obligation to place consumer protection at the heart of this growth is evidenced in the implementation of the Second Payments Services Directive’s (PSD2) requirement for Strong Customer Authentication (SCA). While financial services remain challenged with ever more malicious cyber threats, AML and fraud regulations are clamping down on crime. The deployment of sophisticated technology is also increasingly being used to identify and quash threat-actors, and particularly in the case of LIBOR’s cessation and ESG objectives. Delving into the key industry-shaping regulatory updates for 2021, the Future of Regulation sets out the insights of leading industry players including Accenture, Clifford Chance, JP Morgan, Mollie, NatWest, Oaknorth Bank, Shearman & Sterling and TrueLayer. Download your copy of the report below now to find out more.

08 February 2021 838 downloads

Report

What will drive the journey towards cashlessness and digitalisation?

Market dynamics and infrastructure vary greatly per country and region but the direction of innovation and change are converging on the same outcome: digitisation and cashlessness. As the world adopts digitalisation in all sectors and societies, there is greater demand for unbanked communities to be banked and for digital banking to enable better choice and control for consumers, greater opportunities for merchants and businesses, increased cross-border trade and benefits for governments. The reasons for the transition away from cash and towards digital include enabling connections between unbanked consumers, merchants and services through mobile money; greater visibility and view on liquidity for merchants, including real time confirmation and settlement; reduction in fraud and crime by implementing a digital trace and, hence, audit system; financial inclusion; for banks, greater volumes and transactions are welcomed also. System integration and standardisation are the crucial factors on this journey to grow the ecosystem and the key tenets of interoperability and ubiquity, each of which drives the other, are becoming the focus for any serious mobile money or digital financial provider. QR codes have been instrumental across the Middle East, Africa and Asia to facilitate mobile and digital payment services and they could provide a gateway to unified and integrated financial offerings, countrywide, regionwide and even worldwide. As digital payments become pervasive, API infrastructures are providing the basis for interoperable systems, but these can be supported also by third party aggregators or, often in developed markets, switch technology. The expansion of API infrastructure and the proliferated services it enables depends on standardised and harmonised interaction and integration, as well as collaboration between private and public firms. Download your copy of this Finextra white paper, produced in association with HPS, to learn more.

18 January 2021 657 downloads

Report

Liquidity and Beyond: Building a future through certainty

Creating a strategic advantage. There is an evolving approach to liquidity management: from merely monitoring, to actively managing and optimising, to using liquidity for a strategic advantage. Achieving this requires the right tools and technology, and also an open mind about the opportunities that effective real time liquidity management can bring. Seconds, minutes or hours – whatever the definition of ‘real time’ in real time liquidity management, its speed is definitely increasing. Banks and corporates are operating in an increasingly dynamic environment: consumers want services on-demand; payments are faster; information travels at warp speed, news is rolling 24/7; and crises can unfold in an instant. This always-on environment has an impact on liquidity, which has to be managed effectively to ensure an organisation can meet its obligations; in times of stress, it can be critical for its survival. Having the right information at their fingertips – in real time – gives bank and corporate treasurers accuracy and assurance in navigating this changing environment. And if liquidity management is done well, they will do more than keep pace with their environment – they will use it to their advantage. The right analysis of information in real time brings better understanding of their customer, their business, the potential to reduce costs and hence, greater potential for planning and growth based on new levels of certainty. The possibilities and potential that the business concept of real time can bring, in conjunction with up-to-the-minute use of advanced technology, is staggering. Businesses and banks were not built to operate in a 24/7 environment, and it is no mean feat to step up to the plate to meet this challenge and turn it into potential. Real time automatic payments, settlement, account updates, exception handling and data sharing can eliminate the need for cash buffers- idle cash becomes investment. Real time can bolster banks’ credit ratings; real time analysis predicts behaviours leading to reduced risk; real time can provide instant forecasting adjustments- further finetuning an organisation’s position. It feeds a 360 view on a client, fostering better relationships, and with agile systems, enables a firm to plan and grow with a certainty hitherto never seen. Now is the time for banks and corporates to act, redefining their business goals, and crucially, their technology requirements. Download your copy of this Finextra white paper, produced in association with Montran, to learn more. Read the associated Industry Spotlight here - Real Time Intraday Liquidity Management.

17 December 2020 426 downloads

Report

Managing Compliance and Growth

For banks large and small there is no question about the sheer volume of transformation pressure currently at play. Regulatory changes on the increase, various migration deadlines to implement amid the general shift to real time means that mere survival in itself can seem like a win. More is required of organisations who want to differentiate and compete for and retain the customer’s attention. When risk awareness plays a crucial role how can banks start to carve a safe and secure route to innovation at a speed which meets market demand for new and intuitive services? For smaller and newer organisations, arguably it is easier when they don’t have legacy constraints and are more attuned to the benefits and possibilities of emerging technologies. But as they strive to diversify and grow their volumes, they are often blindsided by the associated risk and indeed the threat of suffocating a start-up culture. Becoming consumed by the here and now and not being able to see the woods for the trees is an all-too-familiar theme for many medium-sized banks. Being able to establish and refine their own agile way of working so they can learn fast and grow fast is key. But when one size does not fit all in terms of scaling projects, it becomes very difficult to take the reins on their own unique journey of growth. This research paper by Finextra, produced in association with Finastra, is based on several interviews with small and medium-sized banks, garnering their perspectives and experiences in their efforts to grow and scale while managing compliance and all that goes with it. Download your copy of the Finextra industry sentiment report to learn more.

14 December 2020 357 downloads

Report

Securing the API Ecosystem

New and different banking models are emerging as the various influences in financial services today take hold. Change happens at a faster pace than ever, increasing in rate by the year, and this is very much part of the new operating norm. Regardless of the pressure for banks and other financial organisations to adapt, transform and carve a new identity out of an everchanging ecosystem and set of demands and requirements, there cannot be a lapse in the protection of systems, of customer and client data, and hence, trust. This is, after all, arguably the most valuable asset banks have. Security, while not of itself the driver of digital transformation strategies and dialogues, underpins each and every activity, plan and transaction an institution makes or hosts. And the direction of travel that industry transformation is taking places a lot of pressure on reconfiguring systems to be robust, because that direction is branching out into the realm of myriad other players through open banking APIs. In some regions the opening of banking services is mandated, such as in Europe with PSD2; in others, a commercially-driven approach has taken hold, such as in the US. And in others still, where mobile phones have formed the basis of modern banking, it is more an innate approach than a transition or shift, such as in Asia Pacific. APIs are nothing new in financial services, but while they have always been a back office functionality tool, they have now moved very much to the fore in being the connectors of a new, more open financial ecosystem. They have been used to connect developers to payment networks as well as to display billing details on a bank’s website. Through open banking, however, APIs are now being used to allow third parties access to certain data sets, with the requisite consents, and vice versa. They provide democratised, low fidelity, low latency ‘bridges’ between organisations to facilitate the rapid expansion of the ecosystem, competition, and hence choice and empowerment for the consumer. But with such change and opportunity also comes great risk. Download your copy of this Finextra white paper, produced in association with Equinix, to learn more.

26 November 2020 489 downloads

Report

The Future of Payments 2020

The Race Against Time for Payments Transformation. In the age of instant payments and with the first Request to Pay services to go live in 2020, the financial services industry needs to prepare for the impact on the European payments landscape and understand how the growth of digital payments technologies will affect the sector. This report looks at how real-time fraud can be addressed - when KYC remains a challenge – and whether initiatives such as TIBER-EU has the potential to strengthen the resilience of the financial system against cybercrime. The requirements for corporate liquidity management are shifting in the age of instant payments, making way for a more collaborative model to dominate. However, with the availability of mobile devices, payments service providers must prioritise providing their customers a slick customer experience. In parallel to this, financial players must understand the challenges of managing risk in an instant world, which is a paradox that correspondent banking faces. This is where adaptable payments architecture and a smooth standards migration can help banks focus on strategy, rather than the day-to-day processes. Problems with operational efficiency can be overcome with leveraging APIs, but a question is posed when considering whether banks are ready for this technology to be customer-facing and if they would allow account access to third parties. Finextra’s The Future of Payments report will explore how new business models, new operating models and new forms of collaboration are the catalyst for the 2020 payments ecosystem, which in turn, will help banks and payments providers to establish a clear strategy for the future. Organisations interviewed in this report: Bank of England, BNP Paribas, Deloitte, Deutsche Bank, Erste Group Bank AG, EY, ING, JPMorgan, Santander, SEB, Standard Chartered, SWIFT. Download your copy of the report below now to find out more.

24 November 2020 570 downloads

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

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

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

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

Underpinning Innovation with Real-Time Payments

Real-Time Payments growth is just the beginning. Real-time payments systems are proliferating around the world, with higher values and volumes together with greater cross-border connectivity. The industry is tasked with designing and creating the market infrastructure that supports this growth, and is increasingly turning to hybrid multicloud deployments to deliver a new wave of innovation that can take place within all manner of systems, from fraud detection through to liquidity management and accounting software. Increased collaboration and global standards underpin the upward trajectory of digital transformation in a rapidly changing financial ecosystem. Download the full white paper below to find out more.

31 March 2020 902 downloads