TECHNOLOGY & TRUST: COVER FEATURE
Where the
smart money is The ‘Fourth Industrial Revolution’ is at last well under way in payments and FS – but how, not if, companies choose to invest in digitising will define them, says SmartStream’s Roland Brandli
With almost half of UK financial institutions planning to extend their relationships with fintech firms in the next year – up from a third in 2020 – it is crystal clear that the drive to digital, particularly for payments, continues to accelerate at breakneck speed. Furthermore, three-quarters of UK financial services chiefs say technology, automation and digital investment are the top strategic priorities in the year ahead, according to the sixth annual Lloyds Bank Financial Institutions Sentiment Survey. And the key reasons for this fintech investment are the ability to develop new products and services, followed by improving customer experience and then driving growth. The poll revealed more firms expect to increase spending on their technology systems and core platforms over the next 12 months – (77 per cent) compared to last year (62 per cent) – with the aim of improving client experience (71 per cent), driving growth (60 per cent) and boosting
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productivity (59%). Firms also reported that their top technology investment priorities are the Cloud (83 per cent), APIs (77 per cent), and data science, including machine learning and artificial intelligence (69 per cent). More than a third (37 per cent) of companies are also prioritising investment in blockchain, up from 27 per cent in 2020, which suggests more institutions are considering the potential applications of emerging technology after pausing plans at the height of the COVID-19 pandemic. And the trend is not confined to the UK. Investment in open banking technologies by European finance firms has recovered this year, after they held back on spending during 2020. In total, 47 per cent of the 300 organisations recently canvassed by open banking fintech Tink, said open banking budgets had increased in 2021. The recovery comes after a challenging year, which saw expected average budgets fall to €32milion from the
projected €50-100million, as the pandemic wreaked havoc on economies globally. And Tink, which was bought out by Visa for €1.8billion in June 2021, found that investment in payment initiation technology topped the priority list for 72 per cent of executives at finance firms. In the US, banking giant Bank of America (BoA) is ploughing $3.5billion a year into developing digital products and services, to such an extent that CEO Brian Moynihan now regards BoA to be a fintech rather than a legacy bank. For example, among the latest products in its digital payments suite is a business-to-consumer (B2C) solution called Pay to Card, which supports the growing need among corporates to pay consumers quickly and digitally, by depositing funds directly into an individual’s, or small business’, bank account. Roland Brandli, a strategic product manager at SmartStream Technologies, www.fintechf.com
