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

Report

UK Open Banking API Performance 2021-2022

The UK continues to be at the forefront of the global Open Banking revolution thanks to the proactive attitude of the regulators. These regulators helped create an Open Banking ecosystem that encourages and facilitates smaller banks and new entries, including fintechs and neobanks, to participate in the Open Banking market. As the most advanced Open Banking market in the world, the UK provides an example of best practices in the implementation of API-based Open Banking. We studied the performance of the large CMA9 UK banks, traditional High Street banks, credit card providers and building societies, and new entrant banks (neobanks). The endpoints were provided by the banks and measured using our patented APImetrics quality scoring system, CASC (Cloud API Service Consistency). Download your copy of this research report by APImetrics, which is generated from real API calls made using the FAPI compliant consent process with the partnership of tomato pay, a leading open banking provider in the UK. All calls were made between July 1, 2021 and June 30, 2022.

26 October 2022 422 downloads

Sentiment Paper

Seeking Approval - Acquirers vs. Transaction Fraud

Transaction fraud monitoring lies at the heart of fraud prevention for acquiring banks, and while the effort in decreasing fraud rates has advanced significantly, so has the sophistication of fraudsters themselves. The emergence of AI within fraud solution models has come to the fore in recent years and along with it, newly realised appreciation of the value of transaction data, current and historic. Banks need to get to grips with processing and utilising these data to full advantage, to inform a robust and futureproof strategy which can both increase approvals and reduce fraud. For transaction monitoring solutions to drive value, serving both merchants and acquirers alike, intelligence on any given transaction needs to be issued in real time before the submission of authorisation. Approval rates, pricing, customer-centricity, and fraud rates are always going to be key differentiators in a very competitive market. Within these parameters, banks need to continually improve their service to remain competitive, while navigating the various tools and techniques that are rapidly emerging. Different business models prioritise different aspects of case management and scoring, using traditional rules-based methods and more data-led AI and ML approaches. This Finextra industry sentiment report was produced in association with Brighertion, a Mastercard company. It is based on several industry interviews, through which we aim to take a pulse on the industry’s general appetite for real-time, AI-driven, data-rich transaction fraud monitoring, and the various models, technologies, and priorities that shape acquirers’ anti-fraud strategies.

25 October 2022 464 downloads

Report

The Future of Digital Banking in North America 2023

A Money20/20 USA Special Edition 2022 in North America saw a continuation of economic recovery from the Covid-19 pandemic, fuelled by the rapid rollout of vaccinations particularly across the US and Canada. Although the US was the fastest of the G7 economies to recover from the crisis, an enduring impact of the Russia-Ukraine conflict resulted in high inflation and the subsequent cost-of-living crisis is set to continue into 2023. These macrotrends are a catalyst for digital transformation within the financial services industry as banks attempt to grapple with new payments trends, the evolution of digital identity and innovative uses of data to enhance customer experience across retail, wholesale and commercial relationships. In 2022, digital banking for the consumer is far more advanced than the products and services that are available for merchants or large corporations. In 2023, open banking must be utilised to remedy this issue. For the retail customer, although digital methods of managing money are now part and parcel of day-to-day life, the pandemic encouraged, or in some cases, forced people who may have been uncomfortable with using technology to bank on their mobile phones or desktop computers. This unfamiliarity with technology has led to consumers being in environments in which they are vulnerable and at increased risk of fraud and other types of financial crime. In 2023, banks will need to ascertain what they need to adapt and strengthen in fraud prevention while also managing new regulatory and compliance requirements. Further, the areas of onboarding that need to be automated must also be considered as part of a holistic digital strategy, striking the balance between innovation and digital noise. For instance, Web3, the metaverse, digital assets and tokenisation are no longer the monopoly of global tech giants, but are increasingly being shaped by financial players who are having their relevance threatened. This Finextra report, which features expert views from ebankIT, EPAM Systems, Infosys Finacle, and Trustly, will explore topics that impact the digital banking sector and those that will be covered at Money20/20 USA 2022 in Las Vegas. Additionally, key insights from Wells Fargo, Plaid, Green Dot, Silicon Valley Bank, FXC Intelligence, Synapse, Navy Federal Credit Union, Branch, Citi, and the New York State Department of Financial Services will cover how organisations across North America are preparing for imminent change across the digital banking landscape.

21 October 2022 1154 downloads

Report

SaaS: The case for building a new banking business model

Why is SaaS pivotal to tackling regulatory, competition, and technology challenges? Banks are no longer only interested in building their infrastructure in order to serve their customers the best they can. Rather, they strive to position themselves as the orchestrators of API platforms. Software as a Service (SaaS) deployment models are the ideal tool to reduce the struggles faced by banks as their role evolves. SaaS models are highly effective, as they target some of the key challenges banks face in their efforts to digitally evolve while remaining competitive. An increasingly demanding customer base, competition from agile digital players, regulatory burdens and legacy technology are four of these significant hurdles that can be mitigated using SaaS. Not only does SaaS assist in managing these challenges, it can also equip financial institutions with the toolkit required to thrive in the future. This Finextra impact study, produced in association with Temenos, explores how banks can best leverage technologies by third-party providers in order to mitigate industry pressures threatening their business model, adapt to shifts in customers' interaction behaviour, and improve their ability to remain competitive in an increasingly digital ecosystem.

03 October 2022 519 downloads

Report

The Future of ESGTech 2023

A Sibos Special Edition While new risks emerge, so do new opportunities for financial services providers to lead technological innovation and drive positive global change. The key question at this year’s Sibos event and into 2023 will be around how success can be measured, and whether organisations that pave the way for the future of banking will be able to adapt to these new priorities and shifting geographical landscapes. Alongside scaling forward-thinking innovations and managing risk in an uncertain world, in 2023, banks must leverage innovations such as AI, machine learning, big data and privacy enhancing technologies to deliver operational efficiencies and an enhanced service offering. Further, by utilising new initiatives such as Banking as a Service (BaaS), financial players can increase their banking footprint through networks of third-party applications, while at the same time, modernising their legacy platforms and products. With this level of innovation to hand – in a world where financial services providers are being forced to adjust to geopolitical, regulatory, and cybersecurity risks – business models must also evolve to ensure success in uncertain times, whether it be the Covid-19 pandemic, climate change or any other global issue that the United Nations’ Sustainable Development Goals aim to achieve. Driving sustainability and ethics will be pivotal in 2023. This report, featuring expert views from SWIFT, GLEIF, and NayaOne, will explore issues such as climate disclosures, ESG standardisation, greenwashing, and financial inclusion. In addition to this, key insights from the Abraham Kuyper Center, Barclays, BBVA, HSBC, and MUFG, will explore how organisations lead positive change across the globe.

12 September 2022 800 downloads

Report

Rebundling: The Next Stage of the Fintech Evolution

The next stage of the fintech evolution is rebundling. At the core of the industry, the catalyst for fintech evolution has continued to be disruption and innovation, but not one banking or financial services issue can simply be resolved with only disruption or innovation. After the global financial crisis of 2008, it would have been unusual to have more than one or two banking relationships. However, the emergence of an open playing field, and with the application of the Second Payment Services Directive – more commonly known as PSD2 – across Europe, non-financial businesses were able to leverage open banking and open finance initiatives to offer financial services directly to their customers. This, in turn, widened the competition and resulted in the birth of fintech businesses that each focused on attacking one part of the banking value chain – be it payments, lending, FX, or another type of offering. Slow, complex, and expensive processes were no longer the status quo; and alternative players started to disintermediate the incumbents. These new entrants increasingly became popular because of their intention to improve customer experience and provide better products and services than the banks could – and in many cases, disruptors were both better and cheaper than the banks. Additionally, new fintech channels and platforms have become viable competitors to traditional players, tempting consumers away from the institutions they trust in favour of better user experiences. Now it is not unusual for people to have up to 15 financial apps downloaded on to their mobile phones. This Finextra impact study, produced in association with Banking Circle Group, explores the evolution of fintechs and Big Techs from unbundling towards rebundling of financial products and services to the benefit of customers, as well as providing examples for the modernisation of banks and financial institutions.

22 July 2022 788 downloads

Report

Real Time Payments: Solving today's problems for tomorrow's success

Banks understand what they need from real time global payments, but reaching a position where they can leverage the full benefits available is a significant challenge. While multiple projects are underway around the globe in an effort to bring real time to multiple markets, before banks can tap in to the advantages of real time, they must first get their technological house in order. Banks must consider how real time payments should interoperate with each other, and create real time global settlement and clearing. Why does this remain such a challenge? It is all related to what is happening in the payment structure of traditional banks. Whether it’s a tier 1 bank encumbered by legacy systems, or a smaller bank with limited coverage of cross border capabilities, in almost every financial institution, payments tend to be segregated. This Finextra impact study, produced in association with Form3, will explore the current challenges faced by banks in their efforts to meet instant payment objectives, how the global real time ecosystem is driving pressure on financial institutions to evolve, canvas key trends pushing the real time agenda, and the best way for banks to orient themselves for real time success.

23 June 2022 835 downloads

Survey

Payments Modernisation: The Big Survey 2022

How cloud, data-rich ecosystems and real-time digitisation are transforming the payments business This survey, conducted in early 2022, aimed to quantify the latest trends in payments modernisation, cloud and ‘as-a-service’ delivery models for account-to-account payments across corporate, SME and retail banking. It is a forward-looking annual report, which allows for an analysis over time of priority shifts for banks and their customers, and highlights areas where the trend towards digitisation and real-time payments are accelerating. The survey demonstrates there is a clear understanding of the benefits of consolidation of payment types, including operational and customer experience improvements. Progress to this goal highlights the trend towards outsourcing standardised processes such as payment processing to a capable and trusted partner, through the evolution to PaaS, allowing the financial institution to improve its overall operational efficiency and customer propositions. Download your copy of this Finextra Survey Report, produced in association with Volante Technologies, to learn more.

30 May 2022 895 downloads

Report

The Future of Payments 2022

The Cutting Edge of Digital Payments The Covid-19 pandemic and Russia's invasion of Ukraine in 2022 has proven that the financial services industry must be always at the cutting edge of payments. Amid uncertain times, resilience is key and with the rising cost of living expected in the UK and across Europe, criminals will view this as an opportunity to infiltrate financial systems and attack. We will need to adapt at the same rate as fraudsters, and all digital systems must be designed with security at the forefront. Alongside this, education will be crucial to ensuring customers are aware of the risks involved with new financial or payments schemes. As seen with the UST crash and instability around digital assets, the sector must remain cautious before placing all our bets on uncharted waters. With expert views from Banking Circle, CBI, Form3, GoCardless, and Infosys Finacle, in this report you will learn from industry leaders about the events and trends defining global payments in 2022 and beyond. The report also includes insights from Fluency, Hogan Lovells, IBM, McDermott, Will & Emery, Nationwide, Nordea, Linklaters, TSB Bank, and Visa.

27 May 2022 1741 downloads

Report

The Future of Digital Identity 2022

Inclusive, Secure, Fit For Purpose Digital identity will be the catalyst for financial institutions wanting to navigate the data ecosystem in an increasingly sophisticated manner. In addition to an equivalent or replacement to physical identity documents, digital identity has also become a way to provide verified personally identifying information (PII) for software to read and process. Alongside this, over time, digital identity is also being utilised to enhance privacy protection and reduce financial crime through authentication. While biometrics are now part and parcel of life in 2022 – with the prevalence of mobile payments with Face ID and Touch ID – the concept of real-time and frictionless processes is what is driving the future of digital identity forward. According to the World Economic Forum, good digital identity has five key components. These five components form the basis of this report: Useful Inclusive Secure Offers choice Fit for purpose With expert views from CGAP, Citi, EPAM Continuum, HSBC, KPMG, London School of Economics, Loughborough University, The Purple Tornado, and the United Nations in this report, you will learn from industry leaders about the events and trends defining digital identity in 2022 and beyond.

06 May 2022 1077 downloads

Report

Can you afford compliance?

Maintaining compliance for both regulatory and industry-driven standards is complex and expensive, yet fundamental to a financial institution’s ability to provide payment services. As the rate and complexity of compliance changes increase, financial institutions are constantly under pressure from regulators that are adopting agile principles designed to protect the evolving financial ecosystem. Financial institutions also have to balance the growth of modern instant payment rails, the need to support mandated overlay services, and the emergence of new and sophisticated forms of risk. For financial institutions, there is a difficult balance in managing compliance while investing in innovative, customer-centric and competitive capabilities. Further, as the speed of transition to a digital environment increases, so do regulatory and compliance requirements. While recognising the impact that managing and maintaining compliance has on a financial institution, an upfront assessment of applicable regulatory requirements - and integrating compliance with the overall digital strategy - allows financial institutions to minimise risk while providing a platform for building innovative business propositions. Benefits include protection from financial crime, information analysis and improvements to the customer experience – all driving growth while optimising regulatory obligations. The path to compliance and managing risk varies by the maturity of payments markets, with the approach taken in emerging markets being very different from mature markets in EMEA and APAC. This Finextra impact study, produced in association with Fiserv, explores five core areas of compliance that are challenging financial institutions today, and how combatting these concerns can orient institutions for success.

25 April 2022 461 downloads

Report

Payments Transformation: Emerging Stronger

The Finextra Annual Payments Survey Report 2022 in association with Fiserv We discuss findings from the survey on how financial institutions are continuing to grow and tackle emerging and disruptive competition while rationalising investments. There is a change in emphasis towards reduction - reduction in costs through consolidation; reduction in risk through a focus on financial crime; reduction in a one-size-fits-all approach; reduction in resources to address the increasing demands of customers, regulators and the payments industry. It demonstrates that there is a clear understanding of the benefits of consolidation of payment types, including operational and customer experience improvements. Progress to this goal highlights the trend towards outsourcing standardised processes such as payment processing to a capable and trusted partner, through the evolution to payments as a service, allowing the financial institution to improve its overall operational efficiency and customer propositions. Download the report of the results from the recent Finextra Annual Payments Survey, by Finextra & Fiserv, below to learn more.

10 March 2022 913 downloads

Report

ISO 20022: How banks can avoid becoming a cautionary tale

Transitioning to the ISO 20022 financial messaging standard has been high on the agenda for financial institutions for several years, but as deadlines loom, the true advantage of early adoption means institutions are facing new pressure to migrate, and to do so quickly. By late 2022, institutions across the globe will have begun their migration to the new ISO 20022 financial messaging standard for high-value payments. SWIFT’s timeline delays have somewhat hindered the process for many institutions, but the project is resolutely on track for completion by 2025. The benefits of transitioning to the data-rich standard are well documented, but executing the migration itself is relatively new territory for financial institutions and the counterparties that transact with them. Financial organisations should approach their ISO 20022 projects with an honest view of the strengths and weaknesses of their existing infrastructure, so that avoidable mistakes remain just that. Download your copy of this Finextra impact study, produced in association with OpenText, and find out about four key areas that institutions must address when approaching their ISO 20022 migration to avoid unnecessary complications, and instead build an infrastructure that caters to a data-led, customer-centric future.

04 March 2022 604 downloads

Report

The Future of Embedded Finance 2022

Which European Stakeholders will Win or Lose? Momentum towards embedded finance has been building slowly but surely over the past decade, as demand for seamless e-commerce solutions push both financial and non-financial players to serve their digitally discerning customers more effectively. The arrival of Covid-19 and the significant shift in consumer behaviour served only to accelerate the growth of embedded finance solutions. With the unexpected global lockdown not only of brick-and-mortar retail, but of countries’ entire workforces, the economy was forced to operate differently, and the need for a digital, accessible world became more urgent. With significant market appetite and foundations for payments solutions already established, the pandemic laid fertile ground for embedded finance to become entrenched in the everyday lives of consumers. Brands around the world are now scrambling to strategise, develop, and implement their journey toward delivering more effective payment offerings to their customers. This new Finextra report, produced in association with Solarisbank, includes industry expert commentary from financial institutions such as BBVA, Illimity, Nomo, Orange Bank, and Plaid.

28 February 2022 1283 downloads

Report

The Future of Regulation 2022

From Innovation to Execution The fire for innovation in financial services has long been raging, and regulators, having transformed their modus operandi to keep pace with the force of technological change, are carefully approaching their role in the great rewiring of the financial system. The fear once invoked by terms like artificial intelligence, cloud computing, or data sharing, has been relegated to the past, and the role of technology in the future of financial services is now accepted as being intrinsic to its success. With Open Banking reaching new realms of maturity, players have begun questioning how best to measure its success in a post-pandemic world. While Open Finance edges ever closer to pulling all focus away from the original Open Banking objectives, innovators are looking for ways to unbridle all pretence tied to our traditional view of what finance should achieve. Instead, they are placing impeccable user experience at the centre of their offering. This unbridling is also becoming apparent in the burgeoning appetite for decentralised finance offerings by retail and institutional investors. Central bank digital currencies (CBDCs) inject another layer into this mix, as central banks and governments carefully weigh up the advantages and risks of diving straight into the opportunity they present. Regulators are caught in the middle of these rapidly evolving trends and forces, attempting to stay the regulatory course by ensuring stability and security, while also motivated to remain at the forefront of this technology. Resilience has never been a more important focus for regulators, who are shifting responsibility directly onto market players to ensure strength across intertwined systems. Selecting a handful of areas tied to fintech that are either ripe for, or undergoing seismic regulatory evolution, we’ve compiled a wealth of insights from industry experts who have shared their views on the changes we can expect in 2022. This new Finextra report features commentary from industry experts across a breadth of financial, technology and regulatory firms, which include contributions from Accenture; A&O Consulting; Bird & Bird; Change Gap; Coutts; Herbert Smith Freehills; Hogan Lovells; Plaid; Proskauer; P2 Consulting; McDermott, Will & Emery; Noll Historical Consulting LLC; Société Générale; State Street; and The DPO Centre.

07 February 2022 1112 downloads