For operators, it should be ‘software-first’ to take the ATM into its next decade

As the ATM is turning 50 this year, it is at the centre of a massive overhaul of the retail banking landscape. Banks have to completely rethink the way in which they interact with their customers while the digital revolution is taking hold of the sector. The speed at which this change is happening is breath-taking: Data company CACI predicts that the total number of mobile app log-ins by banking customers are going to increase from 427 million in 2015 to 2.3 billion in 2020, while the number of bank branch visits is expected to almost half to 268 million per year over the same period.

With the banking revolution right under way, most ATMs today are still based on a ‘cash and dash’ model with limited additional functionality. However, with the right software strategy, they have the potential to become a cornerstone for the omni-channel banking world as the last remaining touchpoints for banks in the majority of local communities.

Blockchain is hot, but where’s the beef?

In spite of the hype—news of blockchain developments and its associated Bitcoin currency has become nearly ubiquitous—large-scale enterprises have been slow to adopt the emerging technology that promises to disrupt and improve a wide range of industries from finance & banking, insurance and real estate to cybersecurity and even music.

Companies have played with it; they understand what blockchain does and how it works. Their innovation labs have participated in proof of concepts (POCs) and may belong to one or more industry consortiums created to vet the technology, but they haven’t taken the next step and implemented the technology for any mission critical apps.

The Transformation of the Insurance Sector due to the rise of Artificial Intelligence

The need for a business to offer their customers’ personalised, efficient and reliable service has never been greater. Today, society demands instantaneous communication with one another. Technologies such as Apple’s FaceTime, Facebook’s Live Messenger and Microsoft’s Skype allow communication around the world to occur immediately. This ability has meant there has been a proliferation in the amount of data being shared and consequently, it has become expected that businesses provide the same level of communication across devices. Businesses must ensure they connect with customers on a more 1-1 basis and that the customer is at the centre of its business, regardless of time or location.

The need for insurers to focus on customer service is even greater than it is within other industries such as retail, given insurance historically lags behind other industries.

In years gone by Insurers operated in a highly regulated, controlled and predictable environment. They knew that individuals chose their insurer based on their parents previous decisions. Once chosen, individuals would stick to that insurance for years, even for life, accepting new charges and changes in operation as it used to be too difficult and complicated to change insurer, as well as challenging to gather the relevant information on what insurance policy was best for each individual. This is no longer the case.

Banking on loyalty – a bet worth making

Data protection has quickly grown from being a buzz-word to a concern keeping board-level executives up at night.

As demonstrated by recent high profile cyber attacks, the cost of a data breach now comes in all shapes and sizes – from significant financial repercussions to damaged reputation and loss of existing customers. Ensuring this is avoided while improving the customer experience is the real tightrope challenge.

India’s take on large scale payments innovation: ‘Leapfrogging’ to lead the pack

A new wave of payments innovation is taking place globally and emerging, high growth markets are the ones to watch. Encouraged by increasing customer demand, favourable regulation and unburdened by legacy infrastructure, countries in high growth markets are beginning to lead the pack when it comes to large scale payments innovation.

A great example of this leapfrogging trend can be found in India. As the country’s leading payments services provider, we are seeing first-hand that India is fast becoming a hub of payments innovation and disruption at scale. India is home to several of the ingredients necessary to encourage new technology to flourish and old systems to make way for new. Key among these ingredients are the increasing customer demand for digital payments, a supportive regulatory environment and a highly skilled tech market.

Fighting the friction: Bridging the gap in innovation between B2C and B2B payment solutions

The elimination, or at least reduction of all forms of ‘friction’, perceived or obvious has been an enduring human obsession, and great excitement surrounds new discoveries. One can only imagine the furore that followed the first ancient Mesopotamian saying to his or her peers, “Hey guys, instead of dragging this heavy wooden box across the ground…why don’t we attach some round things that spin to the underside?”

Fast-forward 5,000 or so years, and though the types of friction we are seeking to reduce have become a little more nuanced, the excitement of a new discovery is just the same. It’s what makes FinTech such an exhilarating industry to be a part of, as such discoveries and innovations are increasingly prolific. ‘Friction’ in our industry usually refers to the time taken to make payments, and ‘frictionless payments’ are those transactions that can be completed in an instant.

What will the loan industry look like in 2017?

2016 was a busy year for the UK lending industry. The Financial Conduct Authority (FCA) continued to tighten regulation, while consumer credit grew at its fastest rate since before the financial crash. Sarah Jackson, Director, Equiniti Pancredit, looks ahead at the trends and technologies that will shape the sector in 2017

Outsourcing will get smarter

Deloitte’s Global Outsourcing Survey revealed that not only is the use of outsourcing increasing, but attitudes among banks about how they engage with outsourcers is also on the move. Once seen as merely a cost-cutting approach – and make no mistake, this remains a significant motivator – service providers have widened their offerings to provide end-to-end solutions that offer a far greater depth of service support than before. More than ever before, outsourcers are becoming key business enablers that actively promote innovation. This is a key trend that will continue to shape the industry in 2017.

Back to the future for IBOR

The complexity of the investment management industry is growing and the data that needs to be analysed is richer than ever before. This is a consequence of the thinning geographical boundaries within portfolios and the search for alpha that drives managers to incorporate different and more esoteric asset classes within a single portfolio.

The impact of this changing environment has been a resurgence in the industry's use of the Investment Book of Record (IBOR), a central and comprehensive source that tells the complete story of a firm's portfolio activity. An IBOR provides a timely view of a firm's exposures, portfolio positions and cash. The fullness and clarity of the picture it paints means that it provides the intelligence and insights on which many portfolio decisions are made.

The future of the banking industry

Every month we see huge developments and changes happening in the banking industry. In September, IBM released research suggesting that 65% of banks have plans to put blockchain projects in production in three years’ time. Meanwhile the CMA recently released findings stating that banks are not working hard enough for their customers, and the BBC claims more than 600 High Street bank branches have closed in the UK in the past year. On top of this, traditional retail banks are facing increasing competition from digital-first challenger banks such as Monzo (formerly Mondo) and Atom.

The changes aren’t just coming from within the industry, but also from a huge shift in customer expectations. 51% of US adults bank online, as do 47% of Europeans, and this number is likely to increase as more Millennials buy in to financial services. This is part of a wider customer attitude that banks should be using the latest popular technology to provide the best service to their customers. However, with new expectations and technologies emerging all the time, how can the banking industry adapt to this digital world?

I’ll have contactless, please, with a side order of cash

"Why I've cut up my contactless bank card...and you should too," says Ross Clark - they are driving up prices and killing off cash. This Daily Mail article has been stirring up a lot of debate here in the UK. I won’t go through its contents in detail (you can find it here). But in a nutshell, Clark was sent a contactless debit card and he immediately cut it up with a pair of scissors because banks and credit card issuers are evil and cash is great.

A tad OTT, yes, and his argument contains numerous holes (without a debit card, how will you withdraw your beloved cash, Ross?) But I agree with him on one crucial point. The man and the woman in the street still like and trust physical money and distrust those who seek to do away with it. It’s unfair to write them off as luddites for this (as often happens within the tech industry).

PSR announcement ushers in new era for payments innovation

The Payments Systems Regulator (PSR) has this week announced that the UK payments infrastructure will undergo a reform, in order to increase innovation, competition, and ultimately seek to better serve consumers.

This announcement seeks to break down the current payments status quo which has remained stagnant in this country for too long. The best case scenario is that we now see a flood of innovative competitors coming to the fray, where the needs of consumers, and not the needs of the major payment players, will drive the sector forward.

Gotta Catch ‘em All: Pokémon Go and the Banking Industry

If you had told us that you had never heard of Pokémon Go, especially after the month and a half the new application from Nintendo has had, we at IBS Journal wouldn’t believe you. The alternative reality game has had children and adults alike enraptured, following their phones around outside hoping to catch elusive Pokémon at local landmarks.

Explosive would be the right word to describe just how much of a phenomenon Pokémon Go has become overnight. Not only has it been downloaded in record numbers, but it is being used more often per day than the most popular apps of all time. The app almost has as many daily users as Twitter and the search term “Pokémon Go” and its derivatives have overtaken the most entrenched top Google searches, including those for pornography.

Iceberg ahead! How to steer clear of blockchain disaster

It’s funny how often even the most well-established organisations can underestimate the impact of potential change. Misjudging the effect of a potentially seismic event can prove problematic at best, and disastrous at worst in any industry. 

And yet, somewhat paradoxically, for such traditionally risk-averse institutions, financial services retailers are finding themselves in exactly this position, when it comes to their approach to what could be the most significant disruptor in financial services history over the next few years - blockchain.

UK FinTech: Life after Brexit

Eight weeks ago I wrote Part 1 of this post called #Brexit good for UK #FinTech and got an overwhelming response - mostly abuse! I had to double check my post to make sure I hadn't inadvertently insulted somebody's prophet or, worse, suggested again that Bitcoin is just an over-hyped big waste of electricity! Turns out I simply held a controversial and, what I thought at the time to be, minority view.

Then something interesting happened. In my role I have the privilege of speaking at a lot of FinTech events around the world and for the past few months the conversation tended to turn to #Brexit. Publicly folks were quite vocal about their brexit concerns but privately (for Europeans) they were rather envious of the UK being given the opportunity to decide and mostly saw brexit as an opportunity for the UK if handled correctly.

When I pressed for why they weren't blogging/posting that view it was one of self-censorship. Folks working for big corporates and larger startups were understandably concerned about making public remarks for fear of being quoted and contradicting the (usually Remain) party line of their leaders. Secondly the brexit camp has been consistently badged as a bunch of bigoted loons so they didn't want to be tarred with that brush!

Beware of toxic unicorns

In the spirit of “coopetition,” High Street banks are cozying up to FinTech startups, but the prospect of partnering with a “toxic” one looms large. Rather than try to compete directly with disruptive startups, banks are making decisions whether to partner with, or even buy, these ventures that offer a quick way into true innovation, whether in payments, blockchain or lending.

No one doubts that FinTech, together with blockchain, is one of today’s hottest topics in financial services, with dozens of startups in London alone. Of those to make the FinTech50 list this year, 29 were in London. Most have been around for just two to five years. The lucky ones that reach the magic valuation of $1 billion are known as “unicorns.” Their products range from payments to mortgage lending to bond market social networking, and most have solid backing by venture capital. A staggering $13.8 billion in VC was invested in FinTechs last year, up from $6.7 billion in 2014, according to a report by KPMG and CB Insights.

Keeping the customer front of mind

Banks have focused their efforts on trying to create and launch products that will generate revenue for them but have forgotten the essential element to making a product successful; the customer. FIs must invest in innovation, but only if the intended product seeks to serve the customer. 

In keeping the product customer-focused it creates a need amongst customers and ensures that the offering becomes a necessity when they’re conducting everyday transactions. When a bank brings a product to market that actually solves real problems, it will ultimately become a new revenue channel.

Authentication by ‘selfie’ - will MasterCard bring a smile to the payments world?

At the Mobile World Congress in Barcelona, MasterCard announced the launch of a new authentication solution: payment by ‘selfie’. This follows last summer’s announcement when it stated that it wanted to make passwords and payment codes superfluous.

Cardholders will soon be able to take a selfie at the supermarket cash register instead of entering a password in order to identify themselves as the genuine user. By the middle of 2016, MasterCard’s German customers should be able to prove their identity and authenticate payments in this way. Following this, it is set to be launched in Austria in 2017. Ajay Bhalla, the head of MasterCard's security department is convinced that the "selfie generation" will welcome and use the new feature.

UK retail banking in need of transformation

After a two-year investigation the Competition and Markets Authority (CMA) has published provisional recommendations to improve retail banking in the UK. It’s a sector that deserves attention but once again a golden opportunity to perform a radical overhaul of the existing market has been shunned in favour of a more modest set of anticipated outcomes. 

Rising to the challengers

Challenger banks have been a black cloud looming over the “big four” for the past few years. The traditional High Street banks have been braced for these challengers to shake things up and create an entirely new environment, just as budget airlines did to the aviation industry in the nineties. And with the UK’s FCA keen to see consumers benefit from “effective competition” for regulated financial services, the time seems right.

While those working in the industry are tracking every move of the challengers and what they offer, this awareness has yet to filter down to customers. With the big four still holding over 90% of the UK market, and consumer awareness of challenger brands failing to gain momentum, is the impending shake-up going to happen, and if so, when?

Reality check: What has brought Android Pay to Europe?

Should cash be abolished? To further fan the flames of the debate, Google has dared to step across the pond and launch Android Pay in the UK – the first European country that the service will be available. 

Eight banks and eleven retail chains are being supported by MasterCard to participate in the launch. It’s a strong line-up but how does Android Pay compare with its competitors Apple Pay and Samsung Pay?