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

White Paper

Build, Buy or Bust – Hybrid leapfrogging Legacy

The age-old Build Vs. Buy conundrum has never been brought into sharper focus than it is now. In light of unprecedented unpredictability and economic volatility in recent times, in light of converging pressure brought about as a result of myriad payments systems, real time rails, cross-border implications in a global village, standards development and heightened public awareness and expectation, financial institutions are leaping forwards by falling back on partners to bring systems in line with modern business expectations. Undoubtedly, the advent and availability of open source technology has intensified and strengthened both sides of the Build Vs. Buy argument. For one thing, it has enabled banks and financial organisations to tailor and sculpt new processes and systems around their exact needs, with the availability of non-proprietary technology. For another, it has brought about a plethora of third party ‘enablers’, as well as having inspired fintech services firms by way of creating plug-and-play or pay-as-you-go offerings. And alongside all of this, the development of cloud technology and its permeation throughout the financial services industry has oiled the wheels for the journey, facilitating the bespoke and dynamic capability that open source cloud offers, and compounding the technological know-how and prowess of both banks and fintech providers the world over. There are other influencing factors, such as the API economy, the concepts of open finance, open data; external global, market and economic drivers and events that shape the demand for improved and instant banking services in the first place, putting pressure on operations to the point that banks need to fast-track pretty much every modernisation or product development project they have going, inevitably having to outsource some of this burden. Download this Finextra report, produced in association with Cloudera, to learn more.

22 September 2023 265 downloads

Future of Report

The Future of the Global Financial Ecosystem 2024

A Sibos Special Edition. Our world has experienced several unexpected and unprecedented events over the last few years, which show no signs of slowing down. This year’s Sibos aims to connect those in the financial services community who have experienced fragmentation, in the hope that tackling this will help with some of the biggest issues facing banking. The role that financial institutions play in the global environment will continue to be placed under the microscope as situations continue to develop. In light of this, there has never been a better time for those in finance to come together and have frank and open conversations about their future. This applies to not only environmental and social goals for banks, but also the adoption of and adaptation to new technologies. No longer can these issues be placed on the side and given lip service, they need to become an integrated part of each financial institution’s core policies and practices. However, ever increasing this challenge are the continuously changing global circumstances. Due to these circumstances, communication and collaboration are essential drivers for 2024. This Finextra report, produced in association with Swift, includes commentary from BBVA, BNP Paribas, BNY Mellon, Deutsche Bank, ING, JP Morgan, Lloyds, McKinsey, NatWest, SEB, Standard Chartered, UniCredit, and Wells Fargo.

07 September 2023 1048 downloads

Impact Study

Power your banking value chain with AI/ML at scale

In a world of rapidly advancing technology, artificial intelligence (AI) and machine learning (ML) are essential to a bank's growth strategy. McKinsey cautions that banks that do not prioritise AI adoption are at risk of being overtaken by competition and abandoned by customers who are looking for highly personalised experiences. The consulting firm cites four key trends that are leading banks to incorporate AI/ML into their core strategy and operations: Demanding customer expectations driven by digital banking improvements Competition from leading banks’ use of AI/ML solutions The disintermediation of traditional financial services by digital ecosystems Encroachment of big tech players into or adjacent to traditional financial markets and business models. Forward-looking financial institutions are eager to integrate AI/ML into their operations and leverage rapidly evolving AI/ML tools to more quickly and efficiently deliver hyper-personalized products and services to customers, improve operational efficiency, increase revenue, and drive innovation. International Data Corporation (IDC) forecasts that the banking and retail industries are set to deliver the most significant investments in AI/ML over the period of 2022-2026, and are projected to account for roughly 25% of all AI spending worldwide. As in any significant transformation journey, banks face a number of considerations and challenges along the way. First, they’re increasingly required to carefully balance the benefits of innovation brought forward by AI/ML solutions, alongside new regulation designed to ensure fair treatment of customers. Additional challenges in banks’ AI/ML journey include skills gaps and the ability to effectively scale AI/ML capabilities beyond pilots and singular use cases. According to Organisation for Economic Co-operation and Development (OECD) data, AI applications are increasingly evident across a breadth of financial market activities. However, such use cases are approached in silos leaving an opportunity for firms to embed AI/ML across the end-to-end value chain. Download this Finextra Impact Study, produced in association with Amazon Web Services (AWS), to learn more.

04 September 2023 430 downloads

Event Report

Entering New and Niche Markets with BaaS

A Financial Cloud Series Report Banking-as-a-Service (BaaS) has emerged as a prominent and steady trend in the banking sector, significantly disrupting the industry and introducing consumers to faster and more personalised services. Working hand-in-hand with embedded finance, BaaS allows third-party distributors to provide banking services, essentially integrating financial services in non-banking infrastructures. Research revealed that the BaaS market is expected to reach $11.34 billion globally by 2030, a huge jump from $2.41 billion in 2020. The rapid acceleration of the BaaS market is due to the speed of digital transformation currently occurring in the financial industry, with a sharply increasing number of banks and consumers seeking to integrate BaaS services into their offerings in order to provide quicker and more efficient experiences. The rapid growth of third-party non-bank platforms has grown exponentially in recent years to incorporate BaaS services into their offerings. The global market has embraced BaaS and new innovations are pushing the trend to become even more significant in the financial industry. BaaS opens up new opportunities for smaller businesses and for a diverse range of companies to facilitate banking operations on a wider scale. The banking sector has evolved and become more diverse and sophisticated through BaaS, which allows companies to focus on what is best for both businesses and banks. To understand how embedded finance and banking as a service can help to transform the backbone of business operations, experts came together for a Finextra webinar, hosted in association with Temenos, 'Entering new and niche markets with BaaS'. The panel explored how banks can best diversify their product offering with cloud.

16 August 2023 298 downloads

Event Report

Keeping Pace with Customer Experience Demands during Cloud Migration

A Financial Cloud Series Report It has been widely established that the cloud is the next big step for financial institutions to become more agile, flexible, and scalable. The financial industry has become a storm as more and more companies flock to the cloud for data, real-time efficiency, and broader accessibility. According to Google, by 2027 over 50% of enterprises will have shifted to the cloud to boost their businesses and create more accessible and efficient platforms for their services. Cloud is seeing massive growth from all industries, and prominently from the fintech and banking sectors as industry leaders rush to get ahead of their competitors. However the move to the cloud is no easy task, as financial institutions require funds, time, energy, and talent to support the transition. As enterprises embark on their modernisation and digital transformation journeys, they are looking to new technologies to aid as they transition such as AI-driven technology. 72% of cloud experts see digital transformation as more than a simple task of “lifting and shifting” of company data to the cloud. The complexity of restructuring a company’s infrastructure with the help of a third-party in a new space is daunting, and requires a significant amount of prior planning and decision-making. To discuss how financial institutions are adapting to consumer demand and security concerns in the cloud transition, experts came together for a Finextra webinar, hosted in association with Temenos, ‘Keeping pace with customer experience demands during cloud migration’. The panel explored how banks are approaching digitisation on the cloud and using new technologies to scale up and expand.

11 August 2023 156 downloads

Future of Report

The Future of Fintech in Africa 2023

Across fintech - digital banking, digital payments, personal finance, lending, and investment - data is central to the function of all these technologies and the most important source for the analysis of financial products and services, bridging the gap between data security and customer satisfaction. Many organisations, countries and regions have forged ahead in leveraging data, cloud, blockchain and AI to their advantage – one such continent is Africa. Two years after the global financial crisis, Kenyan payments, money transfer and micro-financing service M-Pesa became the most successful mobile phone based financial service in the developing world. This was also just three years after its launch by network operators Vodafone and Safaricom. Further to this, transaction flows sent by banks have grown by an average of 10% year-on-year during this 10-year period. Alongside this, mobile money payments have exploded, with the monthly value of transactions increasing 25 times over between 2010 and 2018. The digital payments market has matured faster in Africa than it has in Europe: the number of electronic payments in France grew from 33 million in 2009 to 61.5 million in 2018, but in Nigeria, the number of electronic payment transactions grew from 66 million in 2008 to over two billion in 2018, according to Statista. Further to this, the number of digital payments users is slated to amount to a staggering 611 million users by 2027. However, Africa’s largest market will be digital investment with a total transaction value of $994 million in 2023 and the digital assets market is expected to show a revenue growth of 36% in 2024. It is evident that Africa is on the rise and leveraging technologies such as AI, blockchain, cloud, and data will only allow the continent’s fintech firms to excel across the digital banking, digital payments, personal finance, lending, and investment sectors. This Finextra report, produced in association with Kora, compiles expert insights from a range of firms, including: Binance, Cloud Africa, Data Scientists Network, JUMO, Mojaloop Foundation, TymeBank, and Yoco, and provides predictions for the future of fintech in Africa.

20 July 2023 571 downloads

White Paper

Can FIs lead the World's ESG charge with Pioneering and Transparent Data Visualisation?

Financial Services are quickly adapting to the changing sustainability demands of customers and new regulatory frameworks. Regulation is being dramatically reshaped such that financial organisations become increasingly obligated to make consciously ethical investment decisions, becoming responsible for non-compliant ESG parties in their own value chains. However, different rules and formats apply in different countries, which causes significant compliance challenges. At the same time, the client or consumer is becoming more aware and more expectant of sustainable and green policies committed to by their financial service provider. Sustainable financing comes handy in the wake of both risks and opportunities. There is an urgent requirement to enable and provide a level of transparency to customers around ESG markers and data. An increasing need for firms to obtain quantifiable and comparable metrics to determine the sustainability and longevity of a business they may invest in or work with. Download this Finextra report, produced in association with Amazon Web Services (AWS) and Tata Consultancy Services (TCS), which takes a view on the rapidly unfolding story of ESG within banking and financial services at large.

30 June 2023 335 downloads

Future of Report

The Future of Payments 2023

Gaining Ground on Global Interoperability. The European Central Bank defines interoperability as 'the set of arrangements/procedures that allows participants in different systems to conduct and settle payments or securities transactions across systems while continuing to operate only in their own respective systems.' While technological efficiency is critical to gaining ground on global interoperability, there are other elements that are crucial to the success of a global payments network. This includes the ability to build seamless connections, connect payment systems across different jurisdictions with varying regulatory requirements and ensure different demographic groups can transact reliably and securely. The payments and transaction banking industry may be unsure of where the fintech evolution will go next, but what is evident is that models for public and private sector collaboration must be established. What this means is that financial services must reach a resolution for the continued challenges around cross border payments, correspondent banking and liquidity management, if we are indeed on the cusp of the instant payments era. The European legislative landscape must also be looked upon as a support, not a hindrance and more must be done to implement the clever use of data so industry participants can forge ahead with initiatives such as open finance, banking as a service and turning payments processing into a business opportunity. Further to this, as technologies such as cloud, artificial intelligence (AI) and robotic process automation (RPA) are utilised for innovation, banks and other financial institutions must step up their fraud prevention and cybersecurity games and establish new ways of customer authentication. Now is the time for commercial banks to lead and the emergence of central bank digital currencies (CBDCs) has proved that strategic potential is there for this sector to thrive and pave the way for the next generation of payments. With expert views from Banking Circle, Quant, and Wise, in this report, you will learn from industry leaders about the events and trends defining global payments in 2023 and beyond. The report includes insights from BNY Mellon, Cecabank, Deutsche Bank, HSBC, ING, Nationwide Building Society, NatWest, SEBA Bank, and Société Générale.

19 June 2023 1469 downloads

Survey

From Cloud to Multicloud, Pathway to Resilience

The term multicloud has various interpretations, each offering different levels of resilience and reliability for bank payment platforms. Financial institutions may believe they have implemented a true multicloud model, but discrepancies in definitions can lead to confusion. Download this report to gain insights from an industry survey, conducted by Finextra in association with Form3, which was designed to glean the general attitude and approach multi-cloud infrastructure, perceived benefits and perceived challenges around implementation. Notably, it sought to establish the general awareness of various new and incoming regulations around resilience and systemic risk, of how cloud and cloud providers can navigate this and how much, if any, business opportunity firms see in resilience and risk compliance.

06 June 2023 373 downloads

Report

The Future of Regulation, Risk Management, and Compliance 2023

How to prepare for the looming regulatory storm. Financial institutions are on course to find themselves caught in a perfect storm of risk and compliance-based challenges during 2023, as market-led trends, technology advancement, and regulatory shifts continue to dominate the headlines. The constant threat of disruption resulting from emerging technologies, business model transformations, and ecosystem changes will force executives to make significant and strategic choices to drive organisational success. Only careful preparation and a sharp eye to the future will be enough for firms to pass through the eye and on to calmer waters. Download your copy of this Finextra report, which compiles expert insights from a range of firms, including: Linklaters, Mazars, Valcon, Pinsent Masons, Fladgate, Saifr, Encompass, ComplyAdvantage, Quantexa, Onfido, Duco, and Santander, to gain a deeper understanding of these pressures bearing down on financial institutions across the industry.

21 April 2023 990 downloads

Report

The Future of Fintech in the UK 2023

A Special Edition for UK Fintech Week 2023 and IFGS 2023 Fintech investment across Europe, the Middle East and Africa fell from $79 billion across 2,379 deals in 2021 to $44.9 billion across 1,977 deals in 2022, according to KPMG’s biannual analysis of global fintech investment, the ‘Pulse of Fintech’ report. Further, total UK fintech investment hit $17.4 billion in 2022, down from $39.1 in 2021. The first half of last year was much stronger than the second, accounting for $32.8 billion in investment, including six deals worth over $1 billion, which includes the $1.8 billion acquisition of interactive investor by abrdn. The latter half of 2022 also saw $12 billion in investment, with the largest deals all valued under $1 billion, including the $839 million buyout of Nucleus Financial by HPS Investment Partners. But what does the future hold for fintech investment in the UK in 2023? This Finextra report, a special edition for Innovate Finance Global Summit and UK Fintech Week 2023, collates interviews with a number of leading fintech firms operating in the UK and explores topics that will be covered at the event in London. Key insights from the likes of Archie, Creditspring, Harrington Starr, Konsentus, KPMG, Moneyfarm, Nova Credit, OakNorth, Open Banking Excellence, Ozone API, Pave, Pollinate, PPRO, Quantexa, Sonovate, Thought Machine, Truelayer, and Zopa, cover how fintech firms across the UK are preparing for the future.

13 April 2023 686 downloads

Report

Customer Experience - Is Hyperpersonalisation the next frontier?

An Inflection Point as Banks Invest to Improve Customer Experience A Finextra research survey, which was conducted in late 2022/early 2023, aimed to quantify priorities and ambitions in financial services with regard to improving the digital experience of services for the customer, and to what extent services have or will become personalised, or even hyperpersonalised. Financial institutions are prioritising investment in customer experience capabilities in what is seen as a key “inflection point” behind new IT-led growth initiatives, results from this primary research survey show. But feedback also reveals the challenges this objective brings, including legacy IT infrastructure and restrictions imposed by regulatory obligations around data storage and processing. The findings show a genuine and growing appetite by banks and other financial service providers to invest more in making customers’ online engagements easier and more fulfilling. Download your copy of this Finextra Survey Report, produced in association with SoftServe, to learn more.

06 April 2023 447 downloads

Impact Study

How banks can expand the omnichannel for virtual signing experiences

The global pandemic presented a challenge to the way many products and services were offered by banks, and now that we are on the other side of Covid-19, the impact is clear. Covid has permanently altered the expectations and possibilities of how banks conduct their business. According to finder.com, in 2023 24% of people in Britain have a digital-only bank account, compared with only 9% in 2019. This trend looks set to continue with 5.3 million Britons intending to open a digital only bank account in 2023. To achieve success given these dynamics, financial institutions must balance the convenience of the virtual world with the personal touch of th real world. Customers expect their financial service provider to offer the same digital experience they are receiving in other areas of their life. For instance, the proliferation of existing tools that improve digital experiences such as Zoom, Microsoft Teams, or AI-based chatbots, are now proven and effective enablers of digital innovation. However, automation is no longer enough. Today, security and a human connection is a must-have, particularly because remote working is now normalised, but the requirement for collaboration persists. In a world where we are making more financial decisions on digital platforms, there must be a process in place where meetings can be tracked and signatures can be ensured virtually. This Finextra impact study, produced in association with OneSpan, explores how financial services providers can balance security, compliance, and remote interactivity with the need for a more human centric digital experience.

31 March 2023 189 downloads

Report

Sustainable Finance Live - Enabling positive change through innovation and collaboration

A Visual Record from the Sustainable Finance Live Conference and Hackathon 2022 Sustainable Finance Live returned for its fifth edition - and second in-person event - at Events@no6 in London on 29th November 2022. Richard Peers, sustainable finance visionary, contributing editor at Finextra, and founder of Responsible Risk took to the stage to lead a programme of content, workshops, and experiments designed to create actionable ESG strategies and build the ecosystem of partnerships, which will turn strategy into reality. The event saw over 100 attendees lean in, lean back, and learn by doing during the interactive parts of the day. Leaders in the sustainable finance industry discussed the problem statements and solutions that are defining the sector today. The main themes of the conference were data, risk, and financial instruments. Peers explored risk management through the lens of a self-driving car which can use its technology and sensors to move into either the fast or slow lane to avoid an upcoming crash that we cannot yet see. He said: "The finance industry is still looking in the rear-view mirror, basing our risk decisions based on smaller historical analysis, which still of course has huge purpose. "What we want to talk about is how can we actually bring all of the new dynamics in play, so that we can see the slow-motion car crash of climate change, biodiversity loss. "We can think about what that means to our portfolios, and we can actually make the appropriate decisions." Download a Visual Record of the event below to find out more.

31 January 2023 398 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