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

Report

Embracing Open Banking with Secure and Interconnected APIs

In financial services today, data is an asset. But only if it can be accessed, transformed and integrated securely into internal and external ecosystems. In the world of open banking the definitions of competitor, partner and customer are blurring. It is particularly important for financial institutions to have a cohesive strategy to manage the integrations that tie together their systems from back office to customer-facing channels. This needs to happen across lines of business and international operations, and be able to expose functionality and data to build innovative new services with third parties. Application Programming Interfaces (APIs) have become the most accepted method for building systematic connecting points between an organisation and the outside world. They are often used internally as well, alongside more traditional internal integration patterns such as file transfers and middleware. The widespread use of APIs has led some to talk of the “API economy” as a way to describe the new business models emerging. Large organisations are transforming themselves to compete and partner with new service entrants such as aggregators while start-ups create new businesses by combining functionality provided by APIs from multiple sources. There are many drivers for organisations to develop an effective API strategy. Within financial institutions from the board level down there is pressure to continually modernise and embrace digital transformation to optimise costs, become more efficient at developing new products and services and boost revenue from customers that expect better, faster, anywhere/anytime service.

20 December 2019 646 downloads

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How to Protect and Grow in the Fintech Industry

A 3-Step Guide to Generating Revenue and Becoming Profitable. A monetisation strategy must be devised so that the company can decide what value will be created and who will pay, whether it is the customer, thirdparties that want access to the consumer or third-party beneficiaries who can derive value from the user. There is no universal formula for success that can work across all business models. The most common way of generating revenue is charging consumers. This would work well in a startup model as these organisations are unencumbered by legacy infrastructure and cost structures, so new financial services entrants can charge fees that are lower than what customers are accustomed to paying, while at the same time, continuing to create better user experiences. However, untrusting customers want more than a better customer experience and companies need to establish revenue sources that can be diversified over time. Additionally, financial services providers must give their customers a reason to bank with them and this can be done by ensuring defences are built against financial crime, providing analytically driven decisions and streamlining the lending process. With this in mind, there are three important steps to be taken to proceed towards long term profitability.

09 December 2019 425 downloads

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The Future of Banking is Open

The open banking dialogue has at last moved on from compliance concerns and turned to what opportunities, as well as challenges, exist for banks. 2019 could be the year that open banking takes hold but only if banks are able to deliver value-added, premium services via application programming interfaces (APIs). These tools are still in their early stages of development but through robust testing, more standardisation, intelligent use of data and partnerships, banks can develop services that both enhance the user experience and generate new sources of revenue. Banks should be looking at what valuable services they can actually charge for, what services go beyond data capture and money movement and involve new lines of revenue – from online FX wallets to digital banking. They should also look at areas such as corporate banking that are ripe for disruption given that the current dashboard services on offer are typically basic and static. Download this new whitepaper from Finextra, in association with Token, as we explore the shift towards ‘premium’ API-driven banking culture, what drivers and challenges are shaping the developments, and what the new wave of open banking products and services might look like.

29 July 2019 1192 downloads

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Clearing and Settlement: The new battleground for payments innovation

There is significant innovation and competition afoot in the world of payments initiation, driven by consumers and corporates on the demand side, and traditional banks, fintechs and challengers on the supply side. This is mirrored by what can reasonably be called a revolution in the world of clearing and settlement. Real-time / instant payments, blockchain and distributed ledger, new solutions to the old problems of cross-border correspondent banking, and many other initiatives all have the potential to transform how payments are processed, cleared and settled. Financial institutions therefore need to find ways to provide compelling business services based on new methods of payment initiation and novel customer experiences, while keeping pace with the multiplicity of back-end clearing and settlement options – all while managing costs, staying ahead of compliance, and growing market share.

12 November 2018 952 downloads

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The Banks as Universal Digital Trusted ID Providers

This whitepaper by Finextra and HID Global explores the new trends in digital identity and highlights how financial institutions are well placed to play a central role in these developments as well as some of the more advanced responses in the financial sector from both a regulatory and business case perspective. Being able to prove you are who you say you are is the basic underpinning of many economic activities, and traditionally this proof has come in the form of personal interactions and physical documentations. But over the past 20 years, the concept of digital identity has emerged, with varying definitions, and several long-term trends that have been building over the past decade are combining to transform digital identity and the way consumers and businesses interact and transact in the economy. Digital identification and authentication will be radically different in the coming years than the simple username and password combination that have persisted since the dawn of the digital age. And financial institutions, with their long experience of identity assurance and trusted role within the economy, are well placed to play a central role in these developments. Download this new whitepaper produced by Finextra, in association with HID Global, exploring these trends and highlighting some of the more advanced responses in the financial sector from both a regulatory and business case perspective.

06 November 2018 847 downloads

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Payments Transformation: Jostling for Position in the New Digital Landscape

The world is moving ever faster. The willingness of consumers and businesses to tolerate any delay or inconvenience is rapidly approaching zero. Fintechs are entering the market at record pace with a focus on taking profits from any inefficient market. The banking industry is starting to move. From the rapid rise of instant payments to SWIFT gpi, banks are forming a competitive response to these market forces gaining market and mind-share. Download our fourth annual research paper by Finextra in association with Fiserv on the state of the payments market and the competitive challenges and pressures. It focuses on the challenges banks face in building intelligent experiences for their corporate and retail clients to meet their increasing expectation of speed, seamlessness and security. The survey sets out the various aspects of banks transitioning to meet the opportunities and challenges of the ‘faster / instant’ world; the market context (new competitors, new regulations, operation and technologies) with which the banks are contending, the key issues around instant payments and building the business case to support the investment required. This information is supplemented by a look at what’s happening with blockchain and distributed ledger technology. The research was undertaken in September 2018 and is based on a survey of over 100 financial services professionals from around the world.

24 October 2018 1522 downloads

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Payment System Assurance – Reducing Risk through Effective Testing

Banks traditionally offer three services: accepting deposits, making loans and moving money. Once an area in which there was little competition and regulatory focus, today payments is a product led business that has changed beyond all recognition. Now banks and the infrastructure providers are at the centre of an environment which moves vast numbers of transactions and monetary value both domestically and internationally and often in real time. Against this backdrop there is increased regulatory legislation and compliance. All payments must be vetted to ensure both their authenticity and funding, and against various watch-lists – anti-money laundering, anti-terrorist financing etc. Further, the banks’ clients now expect the ability to initiate payment transactions from a gamut of devices from the ERP (Enterprise Resource Planning) and TMS (Treasury Management System) systems of large corporates to the mobile devices of millennials. The only certain feature of banks’ payments infra structure today is change, and the amount of change is at historically unprecedented levels. With the huge risks – business, financial, regulatory and reputational - to banks of failures in their payments infra structure, the importance of testing in this area has never been greater. Download this paper produced by Finextra and Iliad solutions examining the quality of the payments-related testing approaches and systems used by banks operating in the UK. It also sets out the obstacles currently preventing them from moving from limited automation and obsolete processes, to a completely new approach based on a strategic investment in technology to rationalise, simplify and fully automate their testing.

19 September 2018 472 downloads