It’s been announced that the money management app Plum has partnered with the online life insurance, income protection, and critical illness cover broker Anorak to bring long-term support to millennial savers on their financial journey.
Over the pandemic, younger earners experienced a 40% increase in financial vulnerability, leading to 60% of Plum’s customers wanting to save more when lockdown is fully over. Anorak experienced a similar rise in interest from customers, with 47% citing the pandemic as the sole reason for getting life insurance.
Plum’s smart money management app will be bolstered by Anorak’s platform, which helps users discover the kind of life insurance, income protection, or critical illness cover they need to plan for a financially secure future.
Speaking on the formation of the partnership, David Vanek, CEO, and co-founder of Anorak comments: “We’re thrilled to be working with Plum to help bring critical financial services to an increasingly widening range of people.
“This partnership comes as we’ve seen a jump in the numbers of millennials coming to us who are curious about life insurance, income protection, and critical illness cover, as younger earners wise up to the benefits of having protection policies in place.
“We’re excited to be growing and developing alongside such a unique and valuable service, as people look for easier, more transparent ways to save money and map out their financial futures.”
These platforms will work together to help users identify and reach their financial goals, and ensure the future of their finances are comprehensively covered no matter the circumstances. In addition to being able to access Anorak’s range of products on-demand via the app, Plum will also notify customers when it detects that they are already making life insurance payments, giving them the option to check if they could find a better deal via Anorak.
Charlie Bailey, Head of Partnerships at Plum added: “Anorak has a great mission around making life insurance and cover simple, convenient, and user-friendly. This makes Anorak a natural partner for us as we expand our bill offering to give customers better options for protecting their finances in-app.
“Our next step will be to add helpful prompts for customers so that they are well-informed about their financial choices throughout their lives. Many people take out life insurance when they buy a home or start a family, for example. Plum and Anorak will be there for them during these milestones, offering easy access to the financial products they need in a smart, accessible way.”
Insurance is a complex business, predicated on large volumes of data and complex risk analysis. Developing semi or fully automated systems has started to take off in the last few years, thanks to huge advances in artificial intelligence (AI) technologies that are now mature and adaptable enough to have a wide range of data analysis uses on the latest digital insurance platforms.
Mark Colonnese, a director at Aquarium Software has advocated how the insurance industry can benefit from digital technology since he joined the company as a start-up almost 14 years ago. Now, Aquarium Software has insurance customers in the UK, Australia, and North America with a strategic focus on the fast-growing pet insurance sector.
In this guest post for The Fintech Times, Mark explains how using AI and machine learning (ML) is an essential component of fully automated insurance and why the use of these technologies offers benefits for customers and insurers alike.
Automation can help substantially reduce the costs incurred in the manual administration of policies from sales, renewals to claims. This means greater operational efficiency for insurers, resulting in lower policy premiums for the customer – a significant competitive edge in a fiercely competitive marketplace.
AI and ML technologies are indispensable tools for automated insurance platforms, where there is the need to replace human data analysis.
Much of the current focus is on claims management, where insurers are tapping into technologies such as AI and ML to replace traditional paper and labour-intensive processes delivering better customer experiences.
In the early days, AI-based platforms required very specialist knowledge and gave mixed results. Now, AI is more reliable and able to more accurately mimic human thought processes. ML is considered a subset of AI, where software automatically learns from data analysis and improves its sophistication over time. These technologies have the capability to make intelligent human-like decisions but far faster than people could realistically achieve.
One notable benefit is the speed and accuracy at which claims can be settled or policy quotes issued. Using AI and machine learning enables insurers to settle all but the most anomalous claims within seconds through an automated process; there is no need for human intervention.
Even for claims that fall outside standard parameters, AI enables insurers to assess these with a few clicks of a button rather than realms of time-consuming paperwork. From the end customer perspective, an insurance claim that is paid automatically within seconds provides an enhanced and hassle-free experience.
Imagine a vet advises someone that their pet needs an immediate operation costing £800. The vet inputs all the details of the treatment required, sends this to the insurer that analyses the age of the pet, the treatment required, the time needed to perform the operation, the average cost of such treatment both from this vet and others in the region and nationally. Drawing on AI and ML to analyse this data, the insurer’s platform recognises this is a legitimate claim, within the parameters set and responds with an approval code for the vet in near real time. The policyholder is asked to pay the excess and receives a text message telling them the claim is paid and how much cover is left on the policy.
The same principles can be used in a broader range of insurance sectors including household, car, medical and travel claims: customers could make a household claim, have this paid within minutes and a repair company booked at the same time; and a medical insurance claim could be analysed and authorised without the need for paperwork or multiple calls into different call centre agents.
AI technologies are not without their challenges; there is a long way to go before they reach their full potential. Insurtech companies still need to invest in getting models trained up to specific business needs and to ensure that AI and ML software is using optimal data sets. There is a way to go on developing self-service claims applications from mobile phones. Foremost here is customer-centric design and tailoring AI to support real-time data management for mobile devices.
2021 is a pivotal year for insurers in all sectors deciding whether to capitalise on AI technologies. There is no doubt that these have matured enough to deploy and use at scale throughout the industry, and we are excited about the possibilities that AI will offer as this develops further. As no one insurer, customer – or in our case pet – are the same, sophisticated data analysis will enable more innovation and customisation that will address pain points for customers and change the face of the traditional insurance experience.
Two of their respective regions’ most powerful economies are moving closer to the issuance of Central Bank Digital Currencies or CBDCs. In India, Reserve Bank of India deputy governor Shri T. Rabi Sanker said that the bank is working toward a “phased implementation strategy” that would further the country’s multi-year effort to transition its citizens away from cash. India’s efforts to remove cash from the economy, including innovations like the Unified Payments Interface (UPI) and the RuPay network have become increasingly accepted by Indian citizens. But both, as far as Sanker are concerned, face challenges from the persistence of cash and the promise of CBDCs.
With regard to the latter, Sanker has encouraged observers to envision a UPI system based on CBDCs rather than bank balances. In such a framework, there would be no need for interbank settlement and payment systems worldwide could benefit from greater cost efficiencies and faster, even real-time, transaction settlement. As far as the persistence of cash is concerned, small value transactions still make up most cash purchases in the country. But even here Sanker believes that with certain guarantees like transaction anonymity, CBDCs could be efficiently used for these transactions, as well.
Meanwhile in Africa, Rakiya Mohammed, Formation Technology Director for the Central Bank of Nigeria (CBN) told an audience recently that the country will launch its CBDC pilot on the first of October. The project, called Giant, has been in development since 2017 and runs on the open source blockchain Hyperledger fabric. The bank hopes that a CBDC will help support macro and growth management – as well as cross-border trade – and facilitate financial inclusion. Mohammed reportedly cited FOMO – fear of missing out – as one reason why the CBN could not risk sitting on the sidelines while other central banks around the world launched CBDC-related projects and initiatives.
The demand for CBDCs remains an open question to some degree. But proponents of the technology can take heart in a recent study conducted by European deep tech company Guardtime. The firm took a look at opinions toward CBDCs in ten countries including countries in Europe and Asia, as well as in the United States and the UAE. The study revealed that a majority of adults (64%) said that they would be likely to use a digital currency offered by their country’s central bank, with 33% saying they would be “very likely” to use a CBDC. Only 10% of respondents said they would “never” use a CBDC. The CBDC favorable position maintained a healthy lead over CBDC rejection both when it came to converting savings to CBDCs (59% support versus 11% “never”) and being paid in CBDCs (57% support versus 12% “never”).
Summing up the positive results for CBDCs suggested by the study, Guardtime Head of Strategy Luukas Ilves observed, “it is fascinating to see that 64% of people would be willing to use CBDCs – even though they have not been launched yet – and are happy to support and trust Central Banks to ensure digital currencies are delivered.”
Here is our look at fintech innovation around the world.
UK retail banks stand to save £6billion simply by reviewing the contracts they have in place with third-party vendors. This is the claim made by Strategic Resource Management (SRM) Europe and comes shortly after the Kearney Retail Banking Radar reported that European banks must reduce costs by over £25billion in order to become profitable within five years.
Vendor contract optimisation is a common business practice in the US, but far less adopted in the UK and the rest of Europe. SRM specialises in vendor-contract negotiations and the recently-appointed managing director in the UK, David Royle, comments:
“Third-party contracts are a huge proportion of banks’ operational costs, but where vendors have entire teams permanently negotiating and renegotiating their contracts day in day out, banks will typically only review their contracts once every few years, with little point of reference to comparative data. This leads to a negotiating imbalance and sub-optimal contracts.
“Those banks have historically been fixated on reducing headcount and branch cuts as a means of balancing the books. In doing so, they ignore the real issue: they are continuing to pay their vendors too much. IT costs alone, including core processing, payment providers, automation, and digital platforms have increased a staggering 80% since 2015.
“Despite being so-called strategic partners, and regardless of their business alignment with the bank, it is in every vendor’s best interest to keep the banks paying as much as possible, for as long as possible. We want to change this in the UK market.”
SRM’s US operation, which has delivered vendor-contract negotiation services for nearly 30 years, has saved over $3.6billion in vendor fees, for more than 1000 clients. The process has become an essential aspect of meeting profitability targets and transformation initiatives in US banking organisations.
Not only are the UK and Europe behind their US counterparts in this respect, but the pandemic has exacerbated the situation further. With covid-19 having made long-lasting changes to retail banking consumer behaviour, SRM Europe believes that UK banks are now overpaying billions of pounds on third-party contracts. Royle continues:
“The public’s increasing reliance on online banking, driven by repeated lockdowns, has skewed the conditions that many of those contracts are based on.
“Figures from Mastercard recently showed that 35% of customers have increased their online banking usage since the start of the pandemic and that there has been a 40% global increase in contactless transactions. As a result, many volume-based commercial agreements, with contract caps and performance criteria, are now causing significant price hikes and contract anomalies for banks.
“Coming out of this unprecedented period of disruption which will affect long-lasting change in so many ways, means that now is the time for banks to take action, revisit these outdated contracts, and correct the negotiation expertise imbalance. Based on our experience in the US, we estimate up to £6billion of third-party vendor costs could be saved in UK financial services – that’s surely an opportunity to be seized?”
It is reported that the European payment methods platform Limonetik has been acquired by the cross-border payments network Thunes.
This move will complement the existing cross-border payment capabilities of Thunes, by allowing the network to process payments across 70 different countries worldwide, utilising over 285 local payment methods; including mobile wallets, payment by instalments (BNPL), and QR code payment technology. The solution will be known as Thunes Collections.
Limonetik is one of the earliest developers of an alternative payment methods platform suitable for international merchants and marketplaces. And like Thunes, the firm has a habit of forming close partnerships with payment service providers and financial institutions.
Processing more than €2 billion a year, Limonetik is trusted by over 14,000 merchants, marketplaces, and fintech players, including the likes of Deliveroo, UberEats, Veepee, CMA, and Natixis. Founded in Paris in 2007, Limonetik is led by CEO & co-founder Christophe Bourbier, a multiple-time entrepreneur and payment space expert.
Rapid growth in cross-border e-commerce trade has made it essential for global sellers to accept payments in locally preferred methods. There are over 400 alternative payment methods, and this diversity brings integration complexity and back-office costs that Limonetik’s offering resolves with a single API integration.
By joining the Thunes global payment and collection networks, businesses and their customers can send payments to – and get paid in – even the hardest-to-reach corners of the world. With a single, simple connection, Thunes offers fast, transparent, and affordable payments across the world and will now also enable more flexible ways to collect funds. Thunes shares in the belief that collecting funds globally should be easy; regardless of customer location.
“Thunes is recognised for our far-reaching global network and brilliantly simple payments solution. We are excited to further strengthen our offering with a global collections capability made possible through the acquisition of Limonetik,” comments Peter De Caluwe, CEO of Thunes. “We welcome the Limonetik team to Thunes, and as one, we look forward to offering a single end-to-end payment solution that connects every corner of the world and makes the global economy accessible to all.”
Thunes is also unveiling a new brand identity, including a new logo and website to better reflect its well-established market position and expanding service offerings. These changes arrive four years after Thunes’ inception and the company’s successful diversification and scaling of its offering while broadening its global presence.
“Limonetik has been driving the transformation of collections with its platform-as-a-service (PaaS) model, while Thunes possesses a powerful global payments network. We are incredibly excited to extend our combined payments and collections solutions across the world,” added Christophe Bourbier, founder of Limonetik.
In May 2021, Thunes announced a $60 million Series B growth round led by global private equity and venture capital firm Insight Partners, bringing the company’s total funding to $130 million in less than two years. Insight Partners’ support enables Thunes to speed up investment in its operations, product, and technology.
Imagine a banking experience where your bank’s financial products and services are all specifically catered to your unique needs, tailored to your personal requirements and credit capacity. Or if you are an employee at a bank, picture being able to understand consumer risks and needs precisely, because the bank’s AI system has already predicted it. Not only would this make your job easier, but you can better protect everyday people against transaction fraud.
In this article, Mohan Jayaraman, Managing Director for Southeast Asia and Regional Innovation, Experian, shares why AI-Enabled banking is the key to post-pandemic success.
With the COVID-19 pandemic accelerating digitalisation in banks, the scenarios mentioned are not science fiction. From AI-powered Know Your Customer (KYC) processes that prevent fraud, to predictions on changing consumer needs and data-powered consumer decisions – these are the current forward steps being taken in the so-called ‘new normal’.
Optimising AI technology is a necessity for banks to remain relevant in a swiftly changing landscape. And we know that banks are recognising the importance of this AI-first approach – in fact, 59% of businesses globally have already begun investing in advanced analytics and AI, as well as fraud detection methods or software, according to our recent Experian Global Insights Report. Our report also shows that AI can help businesses stay ahead of the curve – 40% say they’re able to better convey data to enhance the customer experience, protect consumer information, and personalise products and services. Thanks to its learning capabilities, AI can ensure banks are able to adapt alongside consumers and industry trends in real-time. Instead of a one-size-fits-all approach, this provides a safer, curated and user-friendly experience that is unique to each individual customer.
And for traditional financial institutions facing fierce competition from digital banks, you’ve got to be able to differentiate yourself with that level of intuition that AI can bring to the table.
Using AI to cater to shifting customer expectations
Remember when we had to set hours aside in a day to take a trip to the bank? Obviously, things have changed now in most markets – especially since COVID-19 altered the way banks do business, as customer expectations shifted almost overnight. Adapting quickly is possible, and it’s necessary today to remain competitive.
Customers now look at speed, personalisation, and a pertinent selection of products to define the new banking experience. In fact, consumers in the four countries surveyed by Experian expect immediate results – only 29% of customers are willing to wait up to 30 seconds to access their bank accounts online, before abandoning the transaction. That’s nearly two-thirds of the population who simply won’t wait. This adds to the list of problems to be solved in the digitisation journey. Additionally, governments around the world, especially in developing nations, are working to harness the power of data to benefit consumers.
AI’s capability to trawl through huge amounts of data and retrieve accurate insights for customers within a short period of time is vital to address this need. Our report found that 3 of the top 5 solutions businesses use to help improve the customer journey are designed for driving insights into faster customer decisions, including on-demand cloud-based decision apps. This improves basic processes, such as signing up for a new bank account as well as more complicated processes like loan applications.
With time and accuracy on our side, we can wave goodbye to tediously long waits to reach counter staff and the tiresome process of filling in lengthy application forms. It also reduces human error and mundane tasks, enabling employees to take on higher-value tasks in providing better services for customers.
Supporting underserved segments in time of need
If we need a loan, we are in a position where we know exactly where to go and who to get in contact with. Access to banking options are right at our fingertips, and we know instinctively which buttons to press to find it. But this is not the case for everyone. Around the world, several underbanked communities exist, who have little access to financial services and solutions. In fact, in Southeast Asia alone, the underbanked population is estimated at 290 million people. Without sufficient credit bureau data to determine their creditworthiness, many of these communities struggle to secure access to loans.
This is where I truly love AI and its ability to use data for good. Utilising AI to reach and support underserved segments of society – whether they simply have never had access, or have found themselves disproportionately impacted by the pandemic – is a huge opportunity for banks. It empowers underbanked communities with access to crucial credit and formal financial services, helping businesses continue to operate and survive.
An example of this is our recent partnership with Standard Chartered Bank, to leverage state-of-the-art machine learning capabilities and improving credit decisioning by effectively ingesting and analysing a high volume of alternative data. This means Standard Chartered is now able to improve credit decisioning and risk management for clients who previously would have been underbanked.
These are just a couple of examples of how AI can benefit banks and communities in a post-pandemic world. The bank of the future will have to meet customers’ rising expectations in an AI-powered world, where it can anticipate and recommend actions, automate key tasks and personalise details that show an understanding of each individual customer’s needs. AI will also ensure banks have the speed to keep up in a digital world, to innovate and to launch new products or services swiftly.
As we traverse a new world and economy impacted by the pandemic, it’s clear that an AI-first approach is the optimal way to ensure banks are ready to tackle any challenges that lie ahead.
Polly is a journalist, content creator and general opinion holder from North Wales. She has written for a number of publications, usually hovering around the topics of fintech, tech, lifestyle and body positivity.
A cryptocurrency exchange marks a milestone in the sector this week, with a series B fundraise of $900 million announced Tuesday. Meanwhile, investors continue to show interest in investment and open banking platforms, as well as spend-management fintechs. Here is the list of these and other notable fundraises this week from Bank Automation News. FTX […]
This week, the Bank Automation News team discusses how identity decisioning platform provider Alloy is using artificial intelligence to attract Generation Z customers. Gen Z, youth born after 1997, can present a challenge to banks because they generally lack traditional credit and banking services. The BAN team also drilled down on the security risks posed […]
“Our platform is relied upon by a majority of the U.S. wireless carriers and various identity platform to securely establish identity,” AuthenticID CEO Jeff S. Jani said. “Our differentiator is the significant ROI we deliver to customers, from stopping more fraud to converting more sales than our digital identity competitors. Our mission is to improve the security for all of our collective identities.”
AuthenticID gives businesses the ability to conduct document-centric identity verification with a high degree of accuracy and fast processing times. The 100% automated solution helps companies increase conversion rates and eliminate fraud at a time when businesses are seeing a surge in the volume of customers who need to be digitally onboarded in order to use their services. AuthenticID leverages machine learning algorithms, AI-powered neural networks, and state-of-the-art computer vision to determine when photos and faces do not match, whether identification documents are fraudulent, and if either the name or face being analyzed has been associated with suspicious activity in the past.
Founded in 2001 by Blair Cohen, AuthenticID made its Finovate debut two years later at FinovateSpring. In the years since, AuthenticID has brought its technology to ten companies in the Fortune 100, three of the top U.S. banks, two of the top three credit reporting agencies, and three of the top five telecommunications companies in the U.S., as well as several international banks and companies around the world. Earlier this month, the company announced that it had reached a new milestone with the launch of its new enterprise-grade SaaS system that can process nearly 35 million identity proofing transactions in a day and more than one billion in a single month.
“AuthenticID has built a market-leading computer vision system to meet the ever-growing requirements of this market,” AuthenticID Chief Technology Officer Richard Huber Jr. said when the milestone was announced. “Our system sets a new standard for reliably and accurately verifying anyone’s identity from anywhere in the world.”
EZOPS, the provider of AI-enabled data control, workflow automation, and regulatory reporting, has announced a new, first of its kind solution that helps financial institutions eliminate the hidden risk and inefficiencies of end user-defined technologies (EUDT). EZOPS offers a friction-free transition off of manual workarounds and delivers data control and automation and makes spreadsheet based data management and workflows obsolete.
End User Defined Technologies (EUDT) hide risk at a tremendous cost and are unsustainable in the digital battleground. For decades, users have relied on standalone excel-, access-, or SQL query-based tools to manually manage business processes at the peril of serious business risks. Not only do these workarounds require manual resourcing to power them, but they are also prone to high levels of operational and process risk. They are by their very nature not scalable and entail reputational risk and monetary impact on an organisation.
EZOPS provides a controlled and secure alternative to EUDT that are used to manually onboard, aggregate, transform, enrich or reconcile data, and manage business processes. EZOPS’ solution eliminates key person dependency and features automation that drives efficiency for repeatable activities such as fetching, validating, transforming, calculating data, and informing and instructing workflow.
By implementing the EZOPS ARO platform, financial institutions are able to transition away from manual and spreadsheet-based tasks into automated business processes that operate in a controlled and transparent way. User-driven data control and automation deliver a standardised solution with a single version of the truth, resulting in accurate reports that affords key executives the ability to make sound business decisions.
EZOPS’ robust solution delivers a single version of the truth, which is vital for generating accurate reports and making crucial business decisions. The solution permits replication of spreadsheet-based mathematical functions, features audit history, version control, integrated automatic data transformation, and built-in workflow and reporting functionalities.
EZOPS’ solution is as easy to use as EUDT many institutions use, yet offers the security and control expected by the C-suite and regulators. Prior to migrating into EZOPS’ system, an institution’s current state of manual tasks can be assessed to determine a prioritisation calendar for implementation to avoid any regulatory risks. Once established, users are able to configure any reconciliation type across an unlimited number of sources. Data is automatically ingested and transformed and all changes are captured by versioning and audit modules and are available for reporting. Machine learning algorithms can be applied to identify the root cause for exceptions, saving users time spent researching and investigating breaks, and resolutions can be automated via EZOPS’ Intelligent Process Automation framework.
EUDT and manual workarounds involve complex processes and interdependencies across an enterprise. EZOPS’ user-configurable, AI-powered automation eliminates risk and inefficiencies, generating valuable and impactful results for financial institutions.
“With no quality or version control and the risk of human error, these end user solutions can lead to errors that affect business-critical tasks,” said Bikram Singh, CEO and co-founder of EZOPS. “Data quality challenges resulting in manual workarounds impedes growth for financial institutions. The path to driving operational alpha and profits lies in intelligent automation and reducing reliance on EUDT.”
Increased vehicle ownership has intensified auto loan fraud. Fraudulent income data and employment details, stolen identities, and fake collateral data for filling loan applications further complicate car finance fraud.
Auto financing companies undoubtedly help genuine consumers with their car purchases. However, there are fraudsters who pose as legitimate consumers to cheat lenders. Auto loan fraud in the US increased from $2.1 billion in 2010 to $7.3 billion in 2020.
A recent case of auto lending fraud, which involved 340 applications, led to a $5.5 million loss. Such incidents have increased over the past decade, exposing the vulnerability of the auto lending application process to fraud.
Cumbersome paperwork, which involves the physical exchange of a borrower’s identification and financial data, makes auto lending highly susceptible to fraud. Synthetic identities are created by modifying Social Security Numbers, and in other instances, financial data is misrepresented to create fraudulent applications. Falsified information originates from the consumer directly or the dealer.
Auto Loan Fraud Manifests in Various Forms
An auto loan fraud is committed when identity, financial, or credit-related information is deliberately or inadvertently misrepresented in order to obtain a vehicle loan. Here are some common methods used by scamsters to commit auto loan fraud:
Document Fraud occurs when consumers provide false information in their KYC documents to either obtain credit or borrow more than they are eligible for.
Identity Theft occurs when fraudsters use stolen identities to take out auto loans in the names of individuals with good credit.
Fraudsters create Synthetic Identities using fake and real information to establish a new credit bureau record that conceals their true identity and credit history. They usually create new credit profiles by fabricating Social Security Numbers or stealing SSNs of inactive profiles.
Dealers or fraudsters often provide Fake Bank Statements or other Collateral, such as deposits, to ensure that the auto loan application is approved.
Auto lenders can prevent auto loan fraud by running foolproof identity checks. Automating the information retrieval and identity verification process is a critical step to ensuring robust fraud detection.
Auto-fill Thwarts Identity Takeover Fraud and Improves Onboarding Experience
Digital loan onboarding solutions can reduce manual processes by auto-filling verified data and automating identity verification. Vehicle loan applications require auto-filling Personally Identifiable Information (PII). With consumer consent, onboarding forms can be auto-populated with verified PII data from trusted sources. Auto-fill not only accelerates form-filling but also detects and flags PII data mismatch, thereby stalling potentially fraudulent applications. Auto-filling vehicle loan applications significantly reduces the number of applications that require manual scrutiny, resulting in increased efficiency and reduced operating costs.
Prove Pre-fill™ leverages phones and phone numbers to deliver verified data and accelerate application velocity while mitigating identity fraud. It uses a combination of Phone-Centric Identity™ and the PRO Model™ of authentication and verification to ensure the possession of the phone, reputation of the phone number used while onboarding, and ownership of the phone against verified personal data.
This article is a synopsis of a blog published by Prove.
Accelerate your onboarding
Contact us to learn how leading companies are using Prove Pre-fill to modernize the account creation process by shaving off clicks and keystrokes that kill conversion.
It is reported that the global credit information and decision analytics provider Creditinfo Group is to launch a scorecard solution, specifically tailored for small to medium-sized enterprises.
Through its unique approach to data and algorithms, this scorecard will help financial institutions improve their credit assessment and facilitate financing to the SME market, which has typically been less able to access finance.
Whilst recognising the importance of a holistic approach to SME risk assessment, Creditinfo is aiming to roll out a global solution to address this challenge. The company is expected to introduce their SME scorecard first in Kenya, ahead of a wider rollout across neighbouring African nations; followed by an implementation within several other key economies across the world.
The unique modelling approach Creditinfo has developed significantly reduces, and in some cases eliminates, the human effort needed to assess customers’ risk profile based on credit data. It is delivered in a software platform that unifies, streamlines, automates, and centralises the risk evaluation process. The incorporation of these elements has demonstrated Creditinfo’s SME scorecard to be considerably more efficient at predicting business failure than existing traditional models.
“SMEs drive innovation and push digitalisation forward for many people by providing services to underserved segments of the population and creating job opportunities,” comments Burak Kilicoglu, Director of Global Markets at Creditinfo. “SME scorecards will accelerate access to finance for the benefit of the whole economic ecosystem. At Creditinfo we have access to a wealth of credit bureau data as a starting point, and so are uniquely positioned to offer this solution in global markets.”
Kamau Kunyiha, CEO of Creditinfo CRB Kenya, added, “Kenya is the most dynamic and receptive market for SME lending innovation, demonstrated by the successful adoption of mobile wallets and microloans. We look forward to seeing the economic impact of this new solution as it comes into full effect and we see more capital flowing through the SME economy.”
This week our experts brought you the following insights based on their experience as investors, entrepreneurs & executives.
MondayIlias Hatzis our Greece-based crypto entrepreneur (Founder & CEO at Kryptonio a “keyless” non-custodial bitcoin and cryptocurrency wallet, that lets users manage bitcoin and crypto, without private keys or passwords and Weekly Columnist at Daily Fintech) @iliashatzis wrote What’s next for DeFi?
In the financial world, 2021 will likely be remembered for two things. First, it was the year that Bitcoin began to gain traction, with a growing number of major financial institutions, huge technology corporations, and even a government signing on. Second, it’s the year DeFi’s value exploded, rising from less than $1 billion to $88 billion, since May 2020. More importantly, DeFi gets rid of the necessity for centralized regulated money custodians and creates a new system based on transparency, democracy, and seemingly limitless mobility.
Editor note: Ilias takes us on a data-driven tour of the state of the art in Defi (Decentralised Finance).
Tigger bounced onto stage at the Pooh Corner Tech Debate and got a big cheer when he said “soon all Bitcoin wallets will have a Lightning Network capability and users will simply notice faster confirmation and lower fees.”
A positive heckler shouted “and that will solve the economic incentive issue for node operators that Eeyore was blathering about”.
On an excitable roll, Tigger pointed to recent news indicating traction.
Editor note: If last week’s post was too bearish for you, you will like this bullish take on Lightning Network.
Digital ecosystems, orchestrated by powerful platform businesses and crisscrossing traditional industry sectors, are estimated to top 30% of global economic activity by 2025. While Amazon, Google, Alibaba, Tencent are early pioneers, others are shaping up across strata, in B2B as well as B2C. They thrive by efficiently matching supply with demand while solving deep entrenched problems, such as protection gaps.
Editor note: Rintu analyses the B2B2C ecosystem from Swiss Re that they call iptiQ
Digital Identity was a key topic at the recent Fintech Week London event, with half a day’s programme dedicated to discussing the topic. Giving the opening keynote, Matt Warman MP, Minister for Digital Infrastructure, UK, spoke of the UK’s Digital Identity Framework and the role digital identity has to play within fintech.
Warman kicked off his speech by outlining what his department is doing to realise the potential, stating that “The combination offers huge opportunities for the two worlds to come together in a way that is really profitable for both sides.”
He began stating that, in its purest terms, a digital identity gives individuals and organisations more choice about how they prove things about themselves, whether that be their age, address or other valuable data, as well as being a powerful tool for fighting fraud.
“Digital ID also gives the potential for businesses to enhance their customers’ experience as well. As we see more and more business carried out online, digital identity products are going to become a really vital building block for the economy of the future, and it’s estimated that widespread use of digital identity products across the UK economy could be worth some 800 million points, supporting businesses to ‘build back better’ and unlocking those efficiency savings, facilitating more secure transactions preventing that fraud.
“It’s a really valuable investment.”
Kalifa Fintech Review
In order to better understand the requirements of digital identification infrastructure, Warman explained how he spoke to Ron Kalifa OBE, author of the recent Kalifa Fintech Review. In this, Kalifa outlined the UK’s position as a fintech world leader, as well as describing how digital identities are a key infrastructural requirement for fintech companies.
“I think it’s clear that digital identities will enable smoother, cheaper, more secure online transactions that will in turn, simplify people’s lives and boost business confidence, particularly in fintech,” said Warman.
He then gave the example of the strict requirements in the financial sector for identity verification, particularly when it comes to onboarding new customers or authenticating transactions. He said digital identities will allow these checks to be far more efficient for businesses and customers, as well as to prevent fraud.
“The work that DCMS (Department for Culture, Media and Sport) is doing to unlock the power of data for the fintech sector via digital identity is really powerful for that sector, and also looking way beyond.”
Moving on to what the government is doing in response to digital ID, Warman outlined that they are committed to “setting the rules of the road for digital identity while leaving as much space as they possibly can for the innovative drive of the market to develop new services that will meet the needs of consumers from all walks of life.
“I believe the thing that will ultimately sell digital identity to the public is compelling products.”
In February, the department published the UK digital identity and attributes trust framework in alpha, in an uncommon move for the government, with the mark one of the frameworks aimed at helping organisations check identities and share attributes in a trusted and consistent way.
“The department has had regular engagement with over 200 stakeholders, including many representatives of the fintech sector, and will soon be publishing the second iteration of that trust framework. The update will take into account the feedback and also include much more detail on certification and on liability. I’ve been really pleased to hear from many stakeholders that they’ve already appreciated the collaborative approach that we’ve taken so far, and we will continue to be that collaborative, if not more so, especially as we look towards the next states of testing that framework to make sure it works effectively for those who are going to use it. Ultimately that’s what this is all about.”
Collaboration is key
After delivering his speech, Warman sat down with The Fintech Times to reiterate his message and advised that they will also be publishing a formal public consultation, covering legislative proposals, with the aim to boost the use of digital identities and enable them to be built on a far greater range of authoritative datasets, faster and more securely.
“This consultation will also include proposals for a governing body to own and manage the trust framework, ensuring that the right protections are in place for consumers and businesses, as well as enabling organisations to prove that they meet the relevant requirements. This will also provide reassurance to the public that it is properly regulated, as we envisage that the new governing body will have a flexible oversight that will allow the market to grow while providing essential protections for consumers.
“I’m really looking forward to working with you all on this consultation, because the engagement with fintech and other stakeholders is absolutely at the heart of developing policies that work for business, for fintech and the broader public as a whole.”
Finally, he concluded: “The government can’t do this on its own, we’ve got to work together and being genuinely collaborative is so important.
“I hope you will continue to support, to listen and to challenge us as we drive forward our delivery and make our collective ambition to bolster fintech across the economy a genuine reality.”
Polly is a journalist, content creator and general opinion holder from North Wales. She has written for a number of publications, usually hovering around the topics of fintech, tech, lifestyle and body positivity.
The National Bank of Ukraine has included the fintech company Paysera in the country’s Register of Payment Systems. After technical preparation, the company will be able to offer faster transfers to and from Ukraine to private customers, transactions in hryvnias, euros, US dollars, and conversion of hryvnia and other currencies.
With the permission of the central bank, Paysera can now partner with local banks, i.e. open an account, perform system integration, make transfers etc. Currently, the company has already reached an agreement with Globus Bank and is negotiating for the opening of accounts in the largest banks – Privatbank, Oschadbank, and Ukrgasbank.
“We received accreditation at a special time for Ukraine. The country has chosen the path of Western integration and is currently modernising its economy by implementing the changes needed for progress, including in the financial sector,” commentsVytenis Morkūnas, CEO of Paysera LT.
“Being here, we feel the support and trust of the central bank and people’s interest in our services. We are pleased that now that we have accreditation we can contribute to the modern, progressive, and sustainable development of the financial sector in this friendly country.”
In Ukraine, the fintech company expects to attract customers who value their time and are eager to handle their daily financial affairs conveniently, with a smartphone or tablet.
According to Nataliia Bondar, Head of Paysera’s customer support in Ukraine, even before accreditation, the company had about 25,000 Ukrainian customers, but until now has not been able to provide them with some services, such as transactions in hryvnia.
“We have become a fully accredited participant of the Ukrainian payment system. We will offer fast transfers and currency conversions to local customers. Transfers in euros, US dollars, and hryvnia to and from Ukraine will be credited faster. Also, more and more Ukrainians shop in European online stores and use euros to buy services, so instant transfers in euros to European banks will come as an advantage here as well,” says Nataliia.
Last month the Verkhovna Rada of Ukraine adopted the law which will allow electronic money and payment institutions to operate in the country. There aren’t any such institutions so far. As soon as the law is implemented, Paysera will consider the possibility of receiving an electronic money institution (EMI) licence in Ukraine.
Only after obtaining an EMI licence will the company be able to start processing payments in Ukrainian online stores – a service that is the main source of Paysera’s income and profit in the Baltics.
Paysera network companies have been granted e-money licences in Lithuania, Albania, and Kosovo, and seek licences in Estonia and Bulgaria. Network companies also operate in Latvia, Romania, Spain, and Ukraine.
Service businesses remain in high competition with growing customer expectations. As the influence of Brexit exacerbated UK business struggles, those looking to run the race are turning to contemporary payment models in order to keep the pace.
Here to analyse the use of embedded finance is Yusuf Ozdalga, a London Partner at the global investment firm QED Investors. In this guest-authored post for The Fintech Times, Yusuf details the necessities of embedded finance, and the associated benefits of its use.
Having set up a business in the agri-food space in a former life, I have shipped more than a few containers of easily perishable fruit across international borders and unfriendly customs check points in freezing road conditions. Each container holds twenty-plus tons of fruit, so there is always a pretty penny riding on each shipment – if the trucker decides to save on his battery and turns off the cooling, condensation easily forms on the boxes the fruit is packed in, and if the box manufacturer turns out to have skimped on the glue, the boxes can come apart at the seams, with the end result being tons of fruit collapsing on top of each other as the truck takes a sharp turn in a snowy mountain pass. You can probably tell I am speaking from experience here.
So you can imagine I was surprised when somebody recently asked me if embedded finance is the telematics of the fintech world.
For those that have not heard the term, telematics refers to tiny little devices that can be embedded into trucks or cars, and then broadcast information to interested parties. In the example above, I would have received a message saying that the temperature in the container was rising, or that the driver was going above the speed limit, warning me that a fruit-avalanche may be around the corner.
There are indeed a lot of similarities here – telematics is embedded into vehicles, and embedded finance seamlessly and invisibly incorporates payments solutions into the processes of all sorts of services businesses. Hence, yes, we can say that the analogy has some merit.
To take this one step further, we may ask what the big benefit of embedded finance is for businesses. What is the equivalent of preventing crushed pomegranates displayed at the corner of a wholesaler’s warehouse floor? Two recent examples from the European press really stand out in this context: Embedded finance, and companies like QED’s investment Weavr, can really help with the confusion created by Brexit and the new European Payments Initiative (EPI).
To be clear, my goal here is not to compare either Brexit or the EPI with a truck full of rapidly rotting fruit. But both Brexit and EPI have created an element of complication in the European payments landscape, and this type of complexity is actually a big boon to companies like Weavr who can help its customers eliminate, or at least better manage this complexity.
A lot has been written about Brexit, so I will not repeat all the resulting complexities here: Bankers moving to Luxembourg, waving at their families left behind in Covid-infested London, companies losing the rights to passport their expensive banking licenses, master-of-the-universe deal makers in the City of London being overlooked in lieu of fishermen (who ironically probably make good use of telematics) – well the list goes on.
In all seriousness, Brexit has created many complexities in the already complex payments world. As the collapsing fruit illustrates, running any business is complicated, and the managers and owners of services businesses across the UK and EU already had their work cut out for them. Trying to incorporate seamless payments solutions in a world where customer expectations have been ever rising due to the experiences provided by the likes of Apple, Google, and Uber was complex enough for ordinary businesses to begin with, and Brexit just added one more straw on top of the proverbial camel.
Hence, it totally makes sense for the likes of Weavr to emerge with one simple value proposition: We worry about incorporating all the various payments rails into simple digestible modules, and you worry about running your business in the interest of your customers. And if Brexit adds one more layer of complexity to your payments flows, it is much easier for us to deal with that than it is for you.
As for the EPI, beyond complexity, it is actually an illustration of a very relevant recent trend: Payments rails are rapidly proliferating. Ant Group and WeChatPay are only two examples of newly emerging payment rails to provide alternatives to the global populace alongside the more established payment networks of Visa, MasterCard, and AmEx. As it is fairly obvious that the biggest networks were American, and the many of the biggest challengers are coming out of China, the politicians and policymakers in Brussels understandably felt left out, and have now announced they will work on creating a payment network that is “made in the EU”.
I will not speculate on the future success of the EPI here – it has been launched by 31 European banks and two third-party acquirers – so all that is left for us to say is “welcome to the global payments space and best of luck!”
However, once again taking the perspective of the merchants and business owners that need to deal with all these consumers showing up at their doorstep asking for acceptance of all sorts of payments methods, complexity is increasing.
Again, just like with Brexit, Banking as a Service providers such as Weavr are now in a position to absorb this complexity into their offering, abstracting all that complexity into one easy module. In the end, we should be thankful for all this complexity, not only because it creates healthy competition, but also because it allows payments specialists to build big businesses using Albert Einstein’s first work principle: Out of clutter, create simplicity.
Payment cards are familiar products, which are part of our daily lives. They have evolved quickly over recent years with the emergence of contactless technology. At the heart of this move, Thales has helped banks to constantly reinvent the card itself and offer the best payment experience. This new innovative card, which integrates a biometric sensor, provides users with increased security and convenience. This latest generation of cards represents a key milestone in the payment space.
The contactless biometric card dramatically simplifies proximity payments and also provides an essential level of privacy and confidence. The user’s fingerprint data is loaded on the card via a simple and secure personal enrollment process, carried out from home or at a bank branch. In addition, none of the biometric details used for the enrolment are shared with any third party; the fingerprint in the card’s chip is only used to provide a local authentication of the cardholder when paying contactless. Neither the retailer nor the bank gets access to the biometric data as it stays securely stored in the chip of the card.
In terms of security, the biometric card ultimately means that a lost or stolen card is useless without the owner’s fingerprint to authenticate a contactless transaction. In such trustworthy payment environments, there is no need to set any payment limit. What’s more, whenever the cardholder’s fingerprint can’t be used – such as for ATM cash withdrawals – use of a PIN code is still possible as a fallback solution.
The Thales EMV contactless biometric payment card is the only solution in the industry fully certified by major EMV payment schemes like MasterCard and Visa. After a series of successful trials around the world, the solution has been commercialised in several countries.
“After a trial of the Thales biometric payment card and its positive outcome, we have now opened the offer to all our customers with confidence. This premium solution addresses several challenges such as convenience, safety and contactless. A simple yet rigorous enrollment process has been set in the branch so the biometric data never leaves the card. This is a key pre-requisite as we take the privacy of our customers’ data very seriously.” Jean-Marie Dragon, Head Of Payments and Cards, BNP Paribas.
To be honest I am surprised that it has taken this long for this undoubted issue to surface. Let’s put it this way if all cloud companies were Chinese would we have tolerated the migrations we have had to date? Cloud computing is obviously top heavy with the old lady estimating in 2019 that four firms controlled 65% of the market. The bank seems to have three main issues concentration of sensitive data and resilience are the first two. But Andrew Bailey, the bank’s governor made the extraordinary claim that he had seen examples of Cloud companies using “ market power” to deny their companies information which allowed them to monitor risk. A bit more digging into exactly what this meant might be appropriate? The reason that Cloud computing exists is because it is cheaper. Add to this the pigs ear that most major banks have of managing their IT estates and it becomes a compelling and profitable way of doing things. The traffic here is only going one way. Nevertheless I suspect that efforts to investigate the developmental integrity of these large companies will yield little benefit. Ultimately a discussion with the major players on how they mitigate the undoubted risks might be a better way of going.
Going back to the previous comment I wonder what we would be thinking now if all cloud provision was owned by the Chinese? President Biden is making it clear that certain practical difficulties are emerging over the increasingly hostile stance taken by China particularly over Hong Kong. From the UK perspective the spotlight falls on HSBC the largest London based Global Bank. It’s performance has been very good up until now largely because of its focus on the buoyant and growing Asian market. However Biden is signalling that those doing business with the Chinese might have to take a hard look at their US operations. HSBC seems to be pursuing a strategy of consolidating its Hong Kong operations despite the obvious growing and accelerating political tensions. HSBC seems to want to have its cake and eat it too but in reality if it wants to keep the Western part of its franchise it will have to be careful. The US has real teeth when it wants to use them. Some of us oldies still remember what it did to Iran just over 40 years ago. HSBC and many others might have to make some really tough choices.
Another must read article from the Daily Telegraph’s City Editor Ben Marlow and he doesn’t pull any punches. He is telling all of us City watchers what we intuitively knew already that there is a toxic mix of inflationary pressures, overvalued assets and a market place tremendously vulnerable to a sharp rise in Interest rates. Nevertheless that is where not just the UK but the whole western world led by the US happens to be. The UK banking sector seem more or less intact at the moment but as pointed out there are red flags all over the place. Government policy during the pandemic has been life support for a lot of businesses how they will cope with financing the expected post COVID bounce from a stretched banking system within both the UK and Continental Europe remains to be seen. Bond defaults are also rising. But the combination of inflationary pressures and economies that cannot take the medicine of higher interest rates is just as it is described here. An unexploded bomb waiting to go off.
Howard Tolman is a well-known banker, technologist and entrepreneur in London,
The digital currency asset manager Grayscale Investments, and CoinDesk Indexes, a subsidiary of CoinDesk Inc., the community platform centred around the transformation of the financial system and the emerging crypto economy, have announced the launch of Grayscale Decentralised Finance (DeFi) Fund, a new diversified investment product, and the CoinDesk DeFi Index.
The CoinDesk DeFi Index aims to provide a broad-based, benchmark representation of DeFi protocols. The Index methodology includes liquid DeFi assets on a market cap-weighted basis.
Likewise, the Grayscale DeFi Fund provides investors with exposure to a selection of industry-specific DeFi protocols through a market-capitalisation weighted portfolio designed to track the CoinDesk DeFi Index.
The Grayscale DeFi Fund comes as Grayscale’s fifteenth investment product, and its second diversified fund offering.
“Grayscale continues to focus on creating opportunities for investors to access new, exciting parts of the digital asset ecosystem,” comments Grayscale Investments CEO Michael Sonnenshein. “The emergence of decentralised finance protocols provide clear examples of technologies that can redefine the future of the financial services industry. We’re proud to offer investors exposure to DeFi through Grayscale’s trusted, secure, and industry-leading investment product structures.”
As of July 1, 2021, the Index consisted of the following assets and weightings:
Uniswap (UNI), 49.95%
Aave (AAVE), 10.25%
Compound (COMP), 8.38%
Curve (CRV), 7.44%
MakerDAO (MKR), 6.49%
SushiSwap (SUSHI), 4.83%
Synthetix (SNX), 4.43%
Yearn Finance (YFI), 3.31%
UMA Protocol (UMA), 2.93%
Bancor Network Token (BNT), 2.00%
“This partnership underscores our leadership in creating institutional-grade digital currency indexes,” said Managing Director of CoinDesk Indexes Jodie Gunzberg. “With increasing attention on the innovations within decentralised finance, it’s critical for the investment community to have tools that deliver calculated exposure to this exciting area of innovation. This collaboration offers investors the data and tools they need to gain exposure to decentralised finance into their portfolios.”
The Fund is now open for daily subscription by eligible individual and institutional accredited investors.
As is the case for its other products, Grayscale intends to attempt to have shares of this new product quoted on a secondary market. However, there is no guarantee this will be successful. Although the shares of certain products have been approved for trading on a secondary market, investors in this new product should not assume that the shares will ever obtain such approval due to a variety of factors, including questions regulators such as the SEC, FINRA or other regulatory bodies may have regarding the product.
As a result, shareholders of this product should be prepared to bear the risk of investment in the shares indefinitely.
Railsbank, the global embedded finance platform, and Visa, the digital payments company, are partnering to drive local fintech enablement, with Railsbank coming on board as a Visa Ready Banking Identification Number (BIN) sponsor. Through the BIN sponsor programme, all of Railsbank’s clients gain access to the same global payment technology, expertise and revenue opportunities as they would if they were a direct card issuer with Visa. This initiative allows Railsbank to expand their market portfolios and become a go-to-partner for Fintechs as they build and launch their card programmes in the country. Partnering with Railsbank also provides Fintechs the solutions and expertise they need to get up and running with speed and efficiency.
Railsbank is also a Visa Fintech Fast Track partner, enabling Fintech companies to gain access to Visa’s network. The programme is part of Visa’s global strategy to open up its network and support a broad range of players that are developing new commerce experiences.
The Fintech company that is first to issue a debit numberless card through Railsbank is Hugo, which launched a Singapore-based “wealthcare” app earlier this year. Hugo is an innovative digital savings proposition that offers a numberless digital-first debit card called the Hugo Platinum Visa Debit Card.
Nigel Verdon, CEO and Co-founder, Railsbank, said: “Our partnership with Visa gives us the opportunity to provide companies with a broad range of Visa payment solutions, such as Cards-as-a-Service, that meet the identified needs of their users. Railsbank simplifies the process of embedding financial services into a customer journey and can therefore help any company – no matter what industry or sector they’re in – to become a fintech by adapting to the needs of their market and customers quickly and easily.”
Kunal Chatterjee, Visa Country Manager for Singapore and Brunei said, “At Visa, we are focused on engaging and building strategic partnerships with the Fintech community. We’re extremely pleased to have Railsbank join us as an exclusive issuer in Singapore, and Banking Identification Number (BIN) sponsor. Our collaboration with Railbank and the BIN sponsorship arrangement is beneficial for Fintechs as it accelerates the onboarding journey with Visa. We are looking forward to seeing more Fintechs benefit from this partnership with Railsbank as we continue to drive innovation and support the launch of products and solutions that transform the payment experiences of consumers in Singapore.”