Fintech - August2023

August 2023

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CREDIT UNION OF AMERICA: Upholding values amid a fast and furious tide of innovation

LENDERS BY TOTAL FUNDING

MSUFCU: Innovating the community

HSB CANADA: A history of digital transformation within insurance

ALVAREZ & MARSAL: TRANSFORMING TECHNOLOGY SERVICES

Jeremy Zung discusses improving employee experience by deploying leading technologies and transforming existing systems

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BUILDING A BETTER WORLD THROUGH FINTECH

For people who work inside the financial services industry, it can be easy to forget on a day-today basis what we’re building towards. Hopefully, in most cases, that should be greater financial inclusion and equity

By 2030, it’s estimated that the top 1% of wealthiest people will own two-thirds of the world’s wealth while the bottom 50% will have just 2%. That leaves almost 50 underdeveloped economies facing “serious impediments” to their economic progress, according to the United Nations.

Despite our best intentions, financial inclusion is still a huge issue for the global financial system. In this issue of FinTech Magazine, we take a look at underbanked populations and ask what can be done to improve the fortunes of people in developing countries. We take stock of the progress financial technology has made in bettering their lives, and whether it has empowered traditionally underserved communities.

We also reflect on some of the core innovations that are driving our industry forward, from open banking and blockchain to the emergence of biometrics. We hope you enjoy the content in this month’s issue!

ALEX CLERE

“IN SOME PARTS OF THE WORLD, PEOPLE ARE MORE LIKELY TO HAVE A SMARTPHONE THAN A BANK ACCOUNT”

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BIG PICTURE

Germany becomes latest European country to incentivise culture among young adults Berlin, Germany

An exhibition hall within the Pergamon Museum in Berlin. Germany has become the latest European country to offer a free ‘cultural pass’ to citizens turning 18 in a bid to incentivise spending on culture and the arts. The initiative, which launched in June, provides €200 towards the cost of museum and gallery admission, live events and theatre. Italy was the first country to offer such a scheme seven years ago, followed by France and later Spain. The latter imposed limits for different types of spending, following criticism that vouchers weren’t being used on a diverse enough variety of cultural experiences.

Image credit: Buena Vista Images

BUILDING ONE OF THE NETHERLANDS’ MOST SUCCESSFUL FINTECH EXPORTS

Pieter van der Does is the Co-Founder and Co-CEO of Dutch payments company Adyen. He founded the business in 2006, long before the word ‘fintech’ was common parlance. A graduate of the University of Amsterdam and Harvard Business School, he worked for a couple of banks including ING and RBS before founding the business almost 17 years ago.

Back then, van der Does recognised that payment providers were offering services based on a patchwork of systems that were built on outdated infrastructure, and – together with fellow founder Arnout Schuijff, who stepped away from the business a couple of years – set about trying to change that.

In the intervening years, Adyen has experienced astronomical success. Today, it has over 3,000 employees across 27 different offices worldwide – from Amsterdam to Sydney, and San Francisco to Dubai. Its clients include household names such as Uber, Facebook, H&M and eBay, who all benefit from Adyen’s end-to-end payment capabilities, data enhancements and financial products all packaged into a single solution.

A diverse team comprising over 115 different nationalities helped realise €767.5bn in processed volume last year – and its long-serving chief exec has reaped the rewards of that success over the years. Pieter van der Does is a billionaire, worth US$2.2bn according to

Forbes magazine. This make him the fourth richest person in the Netherlands, Forbes says (and ‘Schuijff’ the third), bettered only by a small handful of entrepreneurs and industrialists – including Charlene de Carvalho-Heineken, heiress to the beer fortune; and Frits Goldschmeding, the founder of temping agency Randstad.

Adyen is a company in transition

In February this year, it was announced that Adyen was promoting CFO Ingo Uytdehaage to the role of co-CEO –a move that was accompanied by a broader shakeup of Adyen’s executive team. Uytdehaage is a company veteran, having been CFO for 12 years and consequently been present for

PIETER VAN DER DOES

TITLE: CO-FOUNDER AND CO-CEO

COMPANY: ADYEN

INDUSTRY: FINANCIAL SERVICES

LOCATION: NETHERLANDS

EXECUTIVE BIO

Adyen is the financial technology platform of choice for leading companies. By providing end-to-end payments capabilities, data-driven insights, and financial products in a single global solution, Adyen helps businesses achieve their ambitions faster.

The co-founder and long-time CEO of Adyen, Pieter van der Does, has carved himself a place among Dutch business nobility

more than two thirds of Adyen’s growth journey. He had previously been a finance director at Dutch telecommunications firm KPM, and is presently a non-executive director at money transfer business Wise.

But Uytdehaage’s appointment doesn’t necessarily spell the end of Pieter van der Does at Adyen. Instead, the two will share roles. It is the formalisation of an arrangement that is already working in practice, van der Does says, one that will give him more time to concentrate on his health if required.

“I had to balance my time between being at our Adyen offices and my health for a month or two in November,” van der Does said when Uytdehaage’s promotion was confirmed to the press. “What I learned is that, should it be needed in the future, it’s important to be able to spend

time on my health. With Ingo as co-CEO, I can do that while Adyen stays its course.” Many onlookers will also point out that, with van der Does at the helm for all of Adyen’s history prior to February, the company was in desperate need of a clear succession plan – one that it now has.

Adyen founder wants to build culture

In an interview with The Telegraph way back in 2017, van der Does – who is relatively sparing with his media appearances, particularly in an industry that is quick to rush into the limelight – explained that Adyen avoids email wherever possible because it helps to build corporate culture. In the modern workplace, where people have numerous digital communication tools at their fingertips, employees often omit or overlook the personal touch.

In an interview with Bloomberg in March 2023, van der Does also revealed that Adyen was currently undergoing a recruitment drive. The labour market, particularly for engineers, had become somewhat less competitive, he explained. “So let’s sign them up!” However, this had an inevitable effect on Adyen’s profit margin, which has been dented slightly, but once the company was fully staffed-up then this should return to normal.

Recruitment should slow down again next year, he intimated, meaning that its profit margin would “trend in the other direction”. This would be particularly convenient timing, given the current emphasis within the financial industry on long-term sustainability and profitability over near-sighted acquisition and growth.

“SHOULD IT BE NEEDED IN THE FUTURE, [INGO UYTDEHAAGE’S APPOINTMENT AS CO-CEO] IS IMPORTANT TO BE ABLE TO SPEND TIME ON MY HEALTH”

JOHN MYERS

Q. CAN YOU WALK US THROUGH YOUR JOURNEY TO BECOMING CEO OF IDVERSE??

» Becoming IDVerse CEO has been an incredible journey. For the last 25 years, I’ve built a business that helps other businesses grow. One of the things that I did in the early days of my career is launch a venture-build business alongside our consulting business. It was only small, consisting of 150 people in seven countries. It was designed so that we could invest in founders who had a cultural fit and alignment with us. It meant we could put our arms around them, share our skills and embark on the same adventure with them.

Then, around 13 or 14 years ago, two young men, Matthew Adams and Daniel Aiello (OCR Labs Co-founders), came into my office because they wanted help setting up their business properly. Fast-forward a few years and Matt and Dan were looking to move on from that venture. We sat down and they said to

me ‘we want to build the world’s greatest verification technology, and we want you to build the business around us’, so they could focus on the tech while I ran the operational side of things.

I was flattered. And, even though I couldn’t quite grasp their tech proposition, they used big words in their PowerPoint presentation and made the slides really easy to understand, so that definitely helped! And that was the start of OCR Labs, now IDVerse.

As the business grew and we took hold in Asian-Pacific (APAC) markets, it became clear to me that this wasn’t a fractional or part-time role. I was too engaged in the business to let anyone else be a part of it other than myself. I felt a responsibility as the custodian of these guys’ tech, so I removed myself from my main business, and put different people in charge of the venture-build business while I continued to manage what was then OCR Labs, and I’m still here to this day.

With fraud on the rise across the financial sector, identity verification has become all the more important. For IDVerse’s CEO, John Myers, helping people and businesses feel secure is imperative

Q. WHY THE CHANGE FROM OCR LABS TO IDVERSE??

» It was actually hard for us to shift away from OCR Labs. It was something we were quite emotionally invested in, but we felt the name didn’t quite reflect the full extent of what we could offer to our customers. What’s more, the identity verification space has changed so much since OCR Labs was launched. Fraudsters are becoming smarter, they’ve got more ammunition in their armoury. So we made the change to IDVerse to reflect the expanding marketplace – it allows us to really state what the product is: a universal identity verification service.

Q. WHERE DO YOU SEE THE GREATEST NEED FOR IDENTITY VERIFICATION SERVICES?

» Fraud is growing everywhere, so in that sense, the need for an IDVerse is only getting stronger. Our engines are now fired up with generative AI to deal with growing fraud use cases. What that means is that they learn organically how to be stronger and better, to protect people and help the user experience be a little bit more seamless. And I think it’s our use of this AI that’s so important at the moment. Fraudsters have all kinds of abilities to use deep fakes, they’re not scared to try any means necessary. We have a deep fake defender that’s been in production for

JOHN MYERS CEO, IDVERSE

four or five years, and our customers can get that as part of their package.

Bringing customers on board quickly and seamlessly is something the industry needs to pay close attention to. It instils greater trust in the product, and it’s important for clients with data breaches occurring everywhere. Particularly today, biometric verification by means of facial recognition is a crucial piece to help solve some of those issues.

Q. WHAT KEEPS YOU MOTIVATED IN THE HUNT FOR SUCCESS?

» The first thing that motivates me is making sure there is constant capacity in our tech to keep people safe, helping businesses change the way they operate so they and their customers are both protected. To do this plays into my second motivation, because people always say the security requirements they need can’t be achieved. I love to

“MY CAREER TOOK ME TO A PLACE WHERE I REALISED THAT I LOVED GROWING HUMAN BEINGS”

prove people wrong, which, for the most part, is proving the worth of our technology.

Internally at IDVerse, what motivates me is the ability I have to change people’s lives and be the custodian of this fantastic project. I love growing businesses and growing people. It’s people that drive businesses forward. For me, this is the most soul-nourishing experience anyone could have.

Q. WHAT CHALLENGES DOES YOUR ROLE THROW AT YOU DAY-TO-DAY?

» Given that we’ve tripled in size in a very short amount of time, my biggest challenge now is making sure we keep cultural alignment, especially when we have teams growing at an equal pace across different regions across the globe. It definitely keeps things interesting. Offices in different time

zones mean I find myself in different time zones quite often!

So for me, keeping everyone aligned, spirited and driven in the same direction is probably the biggest challenge I have day-to-day.

Q. IS THERE ONE PIECE OF ADVICE THAT’S STUCK WITHOUT YOU THROUGHOUT YOUR CAREER?

» I was told in my early career that I could be more than one thing, which has been sound advice as it’s helped me expand my role and the businesses I’m involved with. But the one thing that has really stuck with me is a phrase spray painted as graffiti in a tunnel near Sydney Harbour: “action is eloquent”.

This really stuck with me. For me, it means just do what you say you’re going to do. Be pragmatic, and get whatever it is you need to do done. And I’ve carried that forward with me ever since.

Adam Elman Head of Sustainability EMEA Google

Musidora Jorgensen Chief Sustainability Officer Microsoft

Nick Jenkinson Managing Director Verto Solutions Ltd

Susan Spence VP, Sourcing Procurement & Accounts FedEx VP,

Geraint John VP, Interos Resilience Lab Interos

Kate Rosenshine Director - Global Azure Technology Sales Microsoft

Aravind Narayan Global Director - Sales Strategy & Execution Refinitiv (LSEG)

Sam Clarke Chief Vehicle Officer Gridserve

TRANSFORMING TECHNOLOGY SERVICES

WRITTEN BY: ALEX CLERE

PRODUCED BY: JAKE MEGEARY

Alvarez & Marsal (A&M) is improving employee experience by deploying leading technologies and transforming existing systems

Supporting a global professional services firm that enables world class organisations presents many opportunities and challenges for an Information Technology function. Supporting such an organisation requires intense focus and high flexibility. These environments leave little time to be introspective and require a CIO to make instantaneous decisions and constantly evolve their thinking. Working in such a highly dynamic and fluid environment has never been a problem for flexible CIOs such as Jeremy Zung, Chief Information Officer (CIO) for Alvarez & Marsal (A&M).

“When I joined A&M during COVID, there was no playbook or manual to tap into,” he says. “It became very clear, though, that our primary focus needed to be about stabilising the core – this included not just technology, but our staff. We had a lot of technical debt that had built up, similar to many companies.”

As global CIO, Zung is responsible for all internal IT matters including all backoffice technologies and systems. Once the core was stabilised, it allowed the focus to quickly move to improving services to A&M’s growing base of global professionals. Transforming the IT department required a change of mindset to operate IT as a business.

Founded in 1983, A&M provides advisory, business performance improvement, and turnaround management services to a diverse range of clients – from corporates and government agencies to private equity firms and law practices. The business has been expanding rapidly of late and now boasts more than 7,500 people, who provide services across the world.

Based in Florida, Zung joined A&M in July 2021 following a 30-year career at professional services firm PricewaterhouseCoopers (PwC). After college, Zung’s first job was as an actuarial associate with Coopers & Lybrand – where he could never have imagined the diverse jobs he would hold during his career. Those roles included multiple client-facing and internal roles including being the US Advisory IT leader for 12 years, leading 13 acquisitions.

It was a big career move when he made the switch to A&M – but Zung himself is not afraid of change, given that his career has been about continuous improvement and transformation, and his 30 years at PwC had prepared him for this opportunity.

“One of the things that really attracted me to A&M was its history based on relationships and not relying on commercials or TV ads,” he explains. “It’s a people business. That really stuck with me – that its work is through referrals, word-of-mouth, people saying what we’ve done for them.”

Jeremy Zung CIO, Alvarez & Marsal

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Arribatec supporting Alvarez & Marsal with ERP expertise

Arribatec has provided a full range of services to Alvarez & Marsal (A&M), from integrating software across banking systems to enabling upgrades to HR solutions

Since being founded in 2015, the Arribatec Group has provided digital solutions, services, consultancy and infrastructure for companies looking to simplify and optimise.

Its department dedicated to business services simplifies the path to the goal for clients by implementing, adapting, maintaining and supporting the entire business landscape with ERP as the core engine.

“We can look after our clients’ businesscritical systems, whether it’s ERP, CRM or HCM, plus DBI and analytics,” explains Tom Vandezande, EVP at Arribatec Group and Global Head of Business Services.

“We can also advise clients on the infrastructure side, whether they want to move to our cloud or one of our partner clouds. Finally, we can overlay all of this with our enterprise architect, business process and organisational changement management services, provided by our EA & BPM Business”.

One example of how Arribatec works with partners comes in the form of its work with professional services firm Alvarez & Marsal. As Mark Bloomer, UK MD of Arribatec Business Services describes, Arribatec offered A&M a full range of services, from integrating ERP and banking solutions to consolidating HR systems.

“A&M has quite a large, sophisticated team, but they needed ERP-specific expertise in a number of areas,” Bloomer adds. “Over time, we have built a mutual trusting relationship, and we’re able to blend in seamlessly into their own teams.”

For Vandezande, central to the future for Arribatec is around bringing its solutions to the global market.

“Our tagline is We Simplify Complexity,” he explains. The idea is to take the headache away from the customer and provide an integrated end-to-end solution covering all their angles: looking at everything from the people side of things, the process side of things, the business-critical systems side of things, as well as infrastructure.” Learn

Reducing the amount of technical debt

One of the first challenges when he joined A&M was reducing the amount of technical debt that the company faced. “During the last few years prior to my joining, we really fell behind on a lot of things – just like most companies,” Zung says. This technical debt consisted of old laptops, servers, infrastructure components that were reaching their end of life, and slow adoption of cloud services. All of these things were directly impacting A&M staff.

“We focused on eliminating critical points of failure – not just systems – but our talent,” he continues. “We had key areas which were vulnerable when a person went on vacation

“The key benefits for us in automation are reducing manual processes, reducing manual mistakes, and improving our efficiencies”

JEREMY ZUNG CIO, ALVAREZ & MARSAL

or happened to be sick. We really looked at that as part of our stabilisation efforts.

“We also needed to improve performance and reliability across our environment, and institute and improve our governance around our project management portfolio. We had a growing number of project requests backing up. We implemented a governance model including a Portfolio Review Board (PRB) to help decide where to invest firm resources. We can’t do every project that gets requested, so we had to create a structure to evaluate each request including its impacts to the business, costs, and expected value to the firm.”

JEREMY ZUNG

TITLE: CIO

INDUSTRY: PROFESSIONAL SERVICES

LOCATION: UNITED STATES

EXECUTIVE BIO

Jeremy Zung is the Chief Information Officer (CIO) for global professional services firm Alvarez & Marsal. Leading a team of IT personnel, Jeremy is responsible for the management of firm standard core systems, networking, infrastructure, cloud and data centre services. Jeremy has a 30-year record of success in multiple client-facing and back-office roles including: Actuary, 401(k) Manager, Director of Network Services Architecture and Design, and PwC US Advisory Advisory IT Leader.

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SHI & Cisco: Accelerating digital transformation together

Ian Young, Market VP of Field Sales, explains how SHI is working alongside Cisco to help customers get maximum value out of their investments

With its global team of 6,000 employees, including around 1,000 technical resources, SHI specialises in helping customers take a smarter approach to their technology strategy. The result is more efficient and effective IT operations across the entire technology landscape.

Thanks to its concierge approach and in-house expertise, SHI has become a trusted partner of countless organisations, including professional services giant Alvarez & Marsal. Ian Young, Market VP of SHI Field Sales, explains: “Working alongside Cisco, we are helping A&M tackle critical business and technological challenges through a strategic approach, driving favourable results.”

Accelerating digital transformation together

As a Cisco Gold Partner, SHI’s longstanding partnership with Cisco ensures exceptional customer support. Cisco has recognised SHI’s performance, naming it US security partner of the year in 2022. Such is the strength of the relationship, close to 100 of SHI’s 1,000 engineers are Cisco-dedicated, including subject matter experts, pre-sales engineers, solution architects and renewal specialists.

“SHI has a unique approach to digital transformation in collaboration with Cisco,” Young adds. “SHI leverages Cisco’s extensive range of cutting-edge products and services, and aligns its engineers and resources to assist customers in achieving their desired outcomes.

“A&M is fully utilising the potential of Cisco’s products and services, while also benefitting from the exceptional customer experience provided by SHI. They know they’re in capable hands with SHI and Cisco.”

A trusted technology partner

SHI’s reputation as a trusted technology partner is the result of its comprehensive portfolio of products and services, complemented by an exceptional team of engineers and subject matter experts who are dedicated to serving their customers.

“We value being involved in strategic planning, technology roadmaps and technology assessments,” continues Young. “We aim to complement these efforts with solution design services so that our customers realise the return on their investments.”

In a growing business, challenges are always popping up. Manual processes that worked fine when the firm was much smaller suddenly became nightmares when you’re talking about roughly 8,000 employees and third-party staff.

“Moving to a two-year laptop refresh cycle is really generous and we knew our end users would love this change,” Zung explains, “but it created a big problem in IT. We had over 85 different laptop makes/models in our environment! Working with resellers Insight and CDW along with our laptop providers Dell, HP and Lenovo, we shrunk that down to under 20 to have a common build process developed by Camwood. When you factor in new hires in addition to our existing staff, that’s about 5,000 machines a year to image and issue. The legacy process for doing that

“While AI gets all the fanfare right now, I still believe most companies who haven’t gone through a transformation can see bigger cost savings by automating all the little things”

JEREMY ZUNG CIO, ALVAREZ & MARSAL

involved taking the computer out of an enduser’s hands for 4-8 business hours – and significant manual tasks for our IT team. “We quickly identified we would need an army of IT staff to meet this need, if we did not completely rethink our tools and processes.”

New processes were devised – and it involved automating “pretty much anything and everything”. The process now starts with an automated survey, which gives each user advance notice that they’re due to receive a new machine soon. In that survey, colleagues choose from approved models to meet their needs. “Some prefer a specific brand, some want a larger screen and some want a lightweight model for example,” Zung says.

The user also selects where they want their new laptops shipped – rather than having to come into the office and schedule

time with an IT staff member. At the heart of the configuration and build process, we leverage cloud services from Microsoft including Autopilot which allow the user, within 30 minutes after powering up, to be up-and running for most of the applications they use. In terms of returning their old machine, they’re given a short grace period to ensure everything is working properly, and then they use a supplied shipping label to return their old laptop to A&M where it is securely cleansed and disposed of.

“We’ve gone from spending 20-40,000 hours of lost hours per year for our users to a fraction of that. When you’re in a consulting firm, that’s a lot of hours to put back into serving our clients.”

Improving performance, reducing downtime

Another part of Zung’s focus when he joined A&M was around improving performance and reliability. A lot of this involved the transition to cloud and taking advantage of the capabilities that cloud service providers bring. “For example, if you think about a physical file server or component, where our staff have to manually take care of issues,

moving that to the cloud saves us significant people time and increases our agility,” Zung says.

Cloud usage has improved system uptime and availability. “It’s quite beneficial for us to leverage the big investment budgets that our cloud providers have!”

“The key benefits for us in automation are reducing manual processes, reducing manual mistakes, and improving our efficiencies,” Zung continues. As the business has grown, so has the IT department, but he recognises that successful businesses need to find ways for support functions to grow at much smaller levels than growth happening to the rest of the firm.

‘IT has to operate like a business’

A&M is a business built on its relationships –both those it enjoys with clients, obviously, but also those that it has with internal

“A&M’s work is based on relationships. It’s a people business”

JEREMY ZUNG CIO, ALVAREZ & MARSAL

stakeholders. This is reflected in the care and diligence that it puts into internal programmes, like changing out laptops every two years to keep frontline technology fresh.

But that mindset extends to A&M’s technology vendors as well. From his Tampa, Florida office, Zung tells us what he looks for in an external partner. He doesn’t just want ‘yes-people’ that do what’s asked of them. “More times than we want to admit, we’re wrong with our internal thinking or sometimes have hidden biases,” he explains. Instead, he wants vendors that guide A&M towards the right solutions and processes that are fit for growth.

Zung wants to partner with vendors who are upfront and honest about their products and capabilities. He wants them to speak up when A&M is headed in the wrong direction, or when the company is about to make a mistake. This creates long-term relationships built on mutual trust and understanding, rather than short term relationships where the supplier may not raise best practices or focus on long term strategy.

A significant part of his approach has been to establish and grow strategic relationships with key providers such as Arribatec, Camwood, CDW, Cisco, Dell, HP, Insight, Lenovo, Microsoft, NewRocket, ServiceNow, and SHI. The benefits come in many forms but include:

• Implementation of managed services

• Migration to cloud services

• Implementing new technologies and capabilities

• Reduced talent costs

• Increased support capacity

• Reduction of duplicative systems/processes

SHI and Cisco have helped A&M navigate through extended supply chain challenges, manage the accelerating nature of technology, manage a growing firm footprint and end-of-life/end-of-support concerns while also working to decrease administrative tasks by leveraging more cloud products. They are trusted providers that are relied upon to help forecast and roadmap audio/video, voice, network and infrastructure services. The tight collaboration between SHI and Cisco allows A&M to recognise and understand emerging services and technologies much earlier than if they had to go it alone.

Another top priority has been to recommit to A&M’s ServiceNow (SNOW) platform and leverage that investment. Besides SNOW incident and ticketing management, A&M has enabled space reservations, security/operations, and hardware asset management. Zung and team are also in-flight implementing software asset management, migrating multiple back office and client service teams away from legacy email and Excel-based incident ticket management and tracking to SNOW.

“We view SNOW as a key piece of our technology enabling capabilities and not

“You can’t just be the smartest IT guy in the room and be a good CIO anymore”

JEREMY ZUNG CIO, ALVAREZ & MARSAL

just a ticketing system or back-office tool. Our journey would not have been possible without the full support of ServiceNow and NewRocket. They have carefully and patiently listened to our needs and unique challenges and avoided just recommending all of their off-the-shelf offerings.”

Arribatec adds bench strength to A&M’s ERP support and project teams, which have allowed the introduction of new features and enhancements, while increasing support capacity with expanded hours and capabilities. Arribatec’s approach to understanding A&M’s growing global needs and requirements has helped to simplify and implement solutions for a growing pipeline of project requests. “They provide us the ability to handle projects in multiple locations around the world while enabling our current support model and capabilities.”

Our relationship with Microsoft has been especially beneficial, when we think about the SME’s they bring to the table. From presales to post sales activities, Microsoft has always been there for us to help introduce and explain new services and offerings while listening to our unique needs. They have supported our journey to leverage more cloud tools including migrations from Sharepoint on-premise to Sharepoint Online, improved usage of the Power Platform, migration to Autopilot and so much more.

“For most of my career, I never thought of IT as a business”. But now, he believes that the leaders of IT departments need to possess broader skillsets than ever. “The breadth and scope of what we support has grown exponentially, and it’s probably not going to stop.

“We’re not just supporting a finance system or an HR system. We do so much more. We negotiate contracts with vendors for supplies

and materials. We’re taking those supplies and materials and making them into some sort of technology product. We’re managing relationships to our business units and providers. We’re managing finances, we’re managing projects. The amount of things we do, we really are like a business inside a business, and I think that’s an important shift that I don’t think’s going to stop.

“I think future generations of CIOs are going to be required to be more than just an IT guy. You can’t just be the smartest IT guy in the room and be a good CIO anymore. CIOs tend to have a much broader offering. They understand finances, business operations, and how a company works. They’ve probably held multiple different roles previously that allow them to really operate a business.”

Spotting how end-users work – and adapting Ultimately, everything that Zung and his team achieve are with a view to productivity. In

isolation, small accomplishments –like enabling key cards for office printers, which activate the machine and prevent the need for long credential strings – may seem relatively insignificant, but those small changes all contribute to a much greater effect.

“If you save somebody 15 minutes a week, assuming they work 45 weeks a year, and

“It’s taken me the majority of my career to realise it, but IT has to operate like a business”

JEREMY ZUNG CIO, ALVAREZ & MARSAL

multiply that by thousands of employees –boom, all of a sudden you’re talking about millions of dollars in time savings. Even something that’s a 5 or 10-minute task for end users can scale up to be over a sevenfigure benefit to the company right away.

“While AI gets all the fanfare right now, I still believe that most companies who haven’t gone through a transformation can see much bigger cost savings and cost avoidances by automating all these little internal things first.”

It’s in this spirit of ‘watching the pennies’ that A&M’s IT function runs an innovation award, which recognises team members who find new ways to eradicate inefficiencies and boost productivity in the workforce. It increases engagement with the company’s technologies, and ensures rank-and-file staff are aware that every little improvement is part of a much bigger picture.

To this end, A&M has begun deploying custom mobile applications to allow staff easier access to information they need. One of the recent innovations is a mobile application called People Directory. It allows colleagues to look up coworkers in different offices or different countries, and filter and sort details including staff level, business unit and more. People Directory replaced manually created PDFs full of pictures and hierarchies that were necessary before.

And the company isn’t going to stop innovating there: later this year, A&M intends to roll out a mobile-based self-service password reset application which will not only reduce the time spent by IT resources but also speed up the reset experience. “It’s a big part of our strategy,” Zung concludes, “of listening to how our people work and helping them out.

AWARDS

The Global FinTech Awards 2024 will be celebrating the very best in Fintech with the following categories:

Digital Banking Award

–PayTech Award

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Digital Currency Award

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FinTech Award

–InsurTech Award

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Sustainable FinTech

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FinTech Technology Award

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FinTech Consultancy Award

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Future Leader Award

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Executive of the Year Award

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Project of the Year Award

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WHY FINANCIAL ECOSYSTEMS ARE A GROWING MUST FOR BANKS

Financial ecosystems are critical to the future of banking, but, at present, many legacy banks are slow to join them. We explore the finer details

WRITTEN BY: LOUIS THOMPSETT

FINANCIAL GROWING BANKS

Five years on from the revised Payment Services Directive (PSD2) – the regulatory framework that started an era of open banking across Europe, and a marketled push proliferating data sharing at banks in the US and Europe, among other jurisdictions – innovation in the sector has started to bear fruit.

Notably, open banking has laid the foundations for banks to create, or join, partnered ecosystems – a network of financial providers offering a one-stop-shop for all customers’ financial services needs including lending, payments, investments and insurance.

It is in this way that financial ecosystems play into the core tenet of open banking, shifting focus from the product to the customer and promoting convenience, choice and efficiency. With each specialised provider contributing its expertise through APIs – be it a bank, fintech or insurer – data can be securely and functionally exchanged to enable a single entity within the ecosystem to offer the services of its partners.

For example, “a customer could access their bank account, apply for a loan from a different provider, and invest in financial markets through another specialised entity –all within a unified ecosystem,” says Seshika Fernando, VP, Head of Banking and Financial Services at WSO2.

Yet, while the revenue-boosting possibilities for ecosystem partners are seemingly obvious, less than a third of the world’s biggest banks are meaningfully investing in banking ecosystems at present, according to a study by Boston Consulting Group’s Henderson Institute. In fact, the same study suggests nearly a quarter of large global banks are not investing in ecosystem models at all.

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JAMES ALLUM SVP FOR EUROPE, PAYONEER

While open banking may have forced the issue for reluctant banks to foster financial ecosystems, particularly those with extensive data pools that may be timeconsuming or costly to integrate into a financial ecosystem, the question remains: why are some banks reluctant to foster or join financial ecosystems?

THE FEAR OF LOSING CONTROL

For Fernando, the slow adoption rate of financial ecosystems at legacy banks comes down to a shift in mindset, one which many

institutions struggle to adopt, having historically built walls around customers’ finances and data.

“Banks have jealously guarded their customer data against any external sources,” says Fernando. “With the introduction of open ecosystems, banks face a new challenge: opening their data to third parties while ensuring customer consent. This concept was counterintuitive and initially intimidating for banks. The idea of sharing customer data with external entities went against the long-standing approach of protecting data within their fortified systems.”

It seems, then, the slow uptake of open ecosystems at legacy institutions is as much a philosophical issue as it is a practical one, with the need to embrace openness and

“THE FUNDAMENTAL CHALLENGE WILL BE WHETHER A BANK’S IN-HOUSE TECHNOLOGY CAN SUPPORT THE DEVELOPMENT OF A DIGITAL PLATFORM”

collaboration a significant hurdle for banks to overcome.

While concerns regarding data security, privacy and maintaining regulatory compliance were once paramount for banks, banking ecosystems have flipped this model on its head, necessitating data sharing with third parties.

As such, security models need updating to guard customers’ data across an entire ecosystem.

Prakash Pattni, Managing Director of Digital Transformation at IBM Cloud for Financial Services, notes: “In order to connect to an ecosystem, a bank needs to give partners access to its system. Open banking is great, but you really need to be able to do this in a secure way. It can take fintechs and startups 18-24 months to onboard with banks because the bank has to complete due diligence and security checks.”

The status of a bank’s legacy technology can, therefore, have a significant bearing on its willingness to join an ecosystem. As noted by Payoneer’s SVP for Europe, James Allum: “The fundamental challenge will be whether a bank’s in-house technology can support the development of a digital platform that allows the onboarding of partners and accounts, while addressing associated security concerns around data sharing and privacy.”

The difficulties legacy banks face, which predominantly need to overhaul their existing tech, is why Allum sees banks with a small geographical focus, featuring products “defined to meet local needs”, as more readily adapted to integrate into broader ecosystems. They typically have smaller tech stacks, less customer data and a greater will to integrate into a wider ecosystem to meet their growth aims.

“WE’RE ALREADY SEEING BANKS MOVING EVERYTHING TO THE CLOUD, IT’S JUST A LONG AND COSTLY PROCESS”

PRAKASH PATTNI MANAGING DIRECTOR OF DIGITAL TRANSFORMATION, IBM CLOUD FOR FINANCIAL SERVICES

However, given the extensive timescale legacy banks face when onboarding the services of fintechs and other relevant partners, it’s a matter of when, not if, most legacy banks will integrate into broader ecosystems. “We’re already seeing banks moving everything to the cloud, it’s just a long and costly process,” says Pattni.

“At IBM, we’re taking a hybrid approach, to help some banking clients accelerate a tech upgrade, moving relevant operations over to the cloud.” Though an expected undertaking from one of the world’s biggest technology providers, IBM’s work with banks firmly

implies a growing willingness from legacy institutions to hasten their open banking capabilities and enter wider ecosystems.

IS BIG TECH A THREAT?

As more banks cotton on to the financial ecosystem ball, it’s small wonder McKinsey has estimated the future of banking represents a US$70tn opportunity for those who break up their services into broader cross-industry platforms. Banks are coming to terms with the importance of financial ecosystems in providing revenue-boosting opportunities.

BRYAN GAYNOR EU CEO AND VP OF PRODUCT, BLUESNAP

RAPHAEL BIANCHI SENIOR PARTNER AT SYNPULSE AND PRESIDENT OF THE OPENWEALTH ASSOCIATION

For Pattni, the key to maximising revenue from an ecosystem harks back to open banking’s core tenet: ecosystems are largely driven by customer expectations.

He says: “Big techs are constantly enhancing the richness of their platforms, integrating multiple payment options. People have gotten used to that level of service and are now expecting that from their financial service providers across the board, whether it’s for offering loans or mortgage products.”

The adaptability and rate of evolution at big tech firms can be attained by “the ecosystem play”, according to Allum, “which allows banks to adapt to a changing financial system as the margins from traditional products like payments shrink.”

The slow migration of banks joining ecosystems – despite their willingness – has led to suggestions that big tech firms, which already have a foothold in digital payments (Apple Pay and Google Pay for example), could look to capitalise on this and launch their own banking services.

Despite these claims, banking is not something Fernando thinks will interest big tech firms. She says: “It is important to consider that big tech makes more revenue from banks through its advertising, media and cloud services. In many cases, big tech firms generate more significant revenues by partnering with or providing services to big banks rather than directly becoming banks themselves.”

This view is shared by BlueSnap’s EU CEO and VP of Product, Bryan Gaynor, who believes tech firms will be put off by the amount of “glue needed to manage regulations and cash-in accounts”, something which banking infrastructures are traditionally built to accommodate. Tech companies are used to “moving significantly faster with their agile infrastructures”, Gaynor adds.

THE STATE OF OPEN BANKING AROUND THE WORLD

Banking ecosystems are being formed as a by-product of open banking, or third-party data sharing between banks and other financial providers worldwide. Below, we look at the two approaches to open banking in different markets across the globe.

Regulatory-driven

Open banking is enforced by regulations in both the UK and EU. After the revised Payment Services Directive (PSD2) was passed in 2018, it became mandatory for large banking institutions to share data with third-party financial services providers. The passing of this regulation paved a path for challenger banks, notably Revolut, Monzo and Starling in the UK, to streamline open banking and foster digital ecosystems in financial services.

Outside of the EU, though, Hong Kong and Australia have both adopted a regulatory-driven approach to open banking too. In 2018, The Hong Kong Monetary Authority issued an Open API Framework, with a four-stage approach for banks to integrate open APIs. Unlike the EU, banks in Hong Kong must restrict access to third-party providers they partner with.

Meanwhile, Australia’s Consumer Data Right Act allows consumers to share their data with third parties of their choice. Unlike the EU, this is a data policy as opposed to a financial one, with a focus on customer-centricity.

Market-driven

In markets including the US, India, South Korea and Japan, open banking is driven by the markets. After regulation in the EU and other markets, many banks in other jurisdictions have opted to share third-party data in order to generate revenues as they look to stay ahead in the digitisation of the global banking industry.

Major US banks are already developing API-based offerings, entering into third-party contracts to attract new customers and gain a competitive edge.

JAMES ALLUM SVP FOR EUROPE AT PAYONEER

PRAKASH PATTNI MANAGING DIRECTOR OF DIGITAL TRANSFORMATION AT IBM CLOUD FOR FINANCIAL SERVICES

SESHIKA FERNANDO VP, HEAD OF BANKING AND FINANCIAL SERVICES, WSO2

SESHIKA FERNANDO VP, HEAD OF BANKING AND FINANCIAL SERVICES, WSO2

There is no appetite for tech firms to become mired in a pool of regulations; they are able to remain agile “by walking the tightrope” of compliance, avoiding an incurrence of full-blooded regulatory requirements according to Pattni.

He notes: “If big tech goes too far, these firms are going to become fully regulated, and then they’re going to have to spend all this time and money on all the things banks do. But they’re trying not to cross that threshold, their margins stay higher that way.”

So, while the threat of big tech swooping down to eat the lunch of legacy banks may not be in the interests of technology firms, it is still imperative that big banks reposition their systems to operate across ecosystems, lest they be outmuscled by challenger banks.

Most banks know it too, it’s just a case of updating legacy systems as quickly as possible to keep pace with technology and customer expectations. Once they do, though, the future of banking as part of a financial ecosystem looks bright.

THE FUTURE OF BANKING: FINANCIAL ECOSYSTEMS

In fact, once banks reposition themselves to a secure data-sharing model, they don’t

even necessarily have to build ecosystem models from scratch.

As Fernando notes: “Ecosystems have already been formed, driven by the emergence of fintech startups, big tech firms, and other players within the financial services industry. Instead, banks can participate in these ecosystems by leveraging APIs and connecting their systems and services with external partners.”

There is a warning, though, for those that don’t integrate their services into a broader digital ecosystem – they may get left behind in this era of digital revolution.

Raphael Bianchi, Senior Partner at Synpulse and President of the Openwealth Association, says: “To be part of the digital revolution, companies must stick to what they do best and focus on joining existing ecosystems to help them integrate seamlessly with providers and help provide clients with the digital experience they expect.”

Despite the ever-hastening need for banks to join ecosystems, for Pattni, it’s just “a matter of time”. He concludes: “As banks get all the pieces of the jigsaw into place, we’ll definitely start to see more adoption of ecosystem models in the coming years.”

“WITH THE INTRODUCTION OF OPEN ECOSYSTEMS, BANKS FACE A NEW CHALLENGE: OPENING THEIR DATA TO THIRD PARTIES WHILE ENSURING CUSTOMER CONSENT”

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MSUFCU: INNOVATING FOR YOUR COMMUNITY

WRITTEN BY: LOUIS THOMPSETT

PRODUCED BY: GLEN WHITE

Benjamin Maxim, Chief Digital Strategy & Innovation Officer at MSUFCU, on helping drive innovation to better serve local communities

It’s not often you find someone who has worked at one company for over a decade, but Benjamin Maxim, Michigan State University Federal Credit Union’s (MSUFCU) Chief Digital Strategy & Innovation Officer, is one of them.

Now in his 16th year at MSUFCU, Maxim’s first role there was as a web developer. Joining at the height of the recession after the collapse of global housing markets in 2007, Maxim says he was “just happy to have a job” at the time.

Initially “planning to stick it out until finding something else” he wanted to do, little did Maxim know he had already landed at the organisation that would define the rest of his career.

“I immediately fell in love with the credit union mission of people helping people and felt it gave meaning to a career in technology that might be absent at other bigger tech firms. I had only ever had an account with a credit union, never a bank, so it was probably meant to be.”

A series of mini careers amid professional and business growth

From web developer to Chief Digital Strategy & Innovation Officer, Maxim has been able to keep his drive by being challenged with new experiences during his time at MSUFCU.

“I have a leader who I’ve reported to for most of my career, who has been so

supportive and allowed me to follow a path of technology and innovation in a series of mini careers along the way. I haven’t just done the same thing for 16 years,” explains Maxim.

From web development to iOS development and then development management, Maxim has been involved with almost all MSUFCU has to offer. Helping build the credit union’s internal web operations, Maxim then found himself building MSUFCU’s new digital banking solution, a transaction solution “similar to Venmo or PayPal”, and mobile remote deposit capture software.

Working across the credit union’s broad technological infrastructure, Maxim was

“WHAT’S UNIQUE ABOUT THE CREDIT UNION INDUSTRY IS THAT WE LIKE TO SHARE AND COLLABORATE, WHICH FOR ME IS REALLY EXCITING”

BENJAMIN MAXIM CHIEF DIGITAL STRATEGY & INNOVATION OFFICER, MSUFCU

then asked to lead MSUFCU’s innovation programme, after building UX, QA, and development teams, the latter of which is now 25-person strong. Now three years into the role, Maxim has already helped develop an innovation lab and an MSUFCU investment arm – Reseda Group – where Maxim serves as Chief Technology Officer.

Growing alongside the credit union, Maxim is grateful he gets “to be involved in everything from start to finish”. And, although admitting his dream job would have seen him at a major tech company like Apple or Google, he “would’ve been a little fish in a massive pond”. At MSUFCU, Maxim gets to be a big fish, and as he grows, so does the pond.

EXECUTIVE BIO

BENJAMIN MAXIM

TITLE: CHIEF DIGITAL STRATEGY & INNOVATION OFFICER

INDUSTRY: BANKING

LOCATION: UNITED STATES

Ben Maxim joined MSU Federal Credit Union in 2007 and currently serves in a dual role as Chief Digital Strategy and Innovation Officer for MSUFCU and as Chief Technology Officer for MSUFCU’s wholly-owned CUSO Reseda Group. He is responsible for assessing emerging business trends and technologies, providing strategic direction for existing and future digital channels, and facilitating innovation throughout the Credit Union including leading their innovation center The Lab at MSUFCU. He is also responsible for the technology and product pillars of Reseda Group and its subsidiaries. Maxim began work initially as a Web Developer and in 2014, he became E-Commerce Manager before moving into roles including Assistant Vice President of Software Development. He earned a bachelor’s degree from Michigan State University and a professional certificate in Innovation & Entrepreneurship from Stanford University. Maxim was honored as Finopotamus’s 2022 Tekkie Awards Technologist of the Year.

Catalyzing Engagement and Growth

Like all credit unions, MSUFCU faces the challenge of nurturing meaningful relationships with members in an era when in-branch visits have declined, made more difficult as a significant portion of its members are students and many of them relocate each year after graduation.

“We have made great strides using technology to make it faster and easier for our members to transact business with us digitally, but those faster interactions came at the cost of engagement and enduring humanized connections in-branch experiences have created for decades.”

Those challenges led MSUFCU’s Ben Maxim to exagens’ behavioral banking solutions with its focus on building and maintaining relationships and a bond of community, digitally.

The decision to implement Behavioral Banking proved to be a winner, with its launch characterized as one of the most successful MSUFCU has experienced, with the quickest adoption rate and most enthusiastic initial feedback including:

36% average engagement across all insights with some as high as 46%

In the very first month, a member responded to enthuse that the insight regarding their Amazon Prime membership resulted in them canceling it and saving money

Providing new benefits to members and growing the credit union often gets stymied by the realities of legacy technology, messy data, security, and privacy protection.

Those concerns were another factor in Maxim’s and MSUFCU’s selection of exagens - its ease of implementation and no requirement for personally identifiable information (PII).

29% engagement with tips reminding members of their credit card benefits and 17% on auto-related opportunities.

Commenting on the success, Maxim noted: “This is just the beginning of the potential that behavioral banking unlocks, and already it has become the key pillar of our digital experience strategy for the future.”

“Exagens has been a true partner and had thoughtfully built not just a great product, but also invested a lot in their process, with a tiered implementation to get up and running quickly. It has all been built to work with the realities we deal with on the ground, delivering results without excessive time and effort on the part of the credit union.’’

“I was immediately interested because exagens approach is grounded in a deep understanding of how people think and make decisions, and how to keep them connected, and energize them to make better financial decisions.’’

BENJAMIN MAXIM

BENJAMIN MAXIM

MoneySparxs:

Customers enjoy better, individualized assistance and guidance, tailored to their specific circumstances.

The credit union reaps long lasting financial growth that can only come from customer satisfaction, loyalty, and trust: a greater share of wallet, more product adoption and usage, and reducing churn.

Behavioral Banking codifies the aspects of psychology, neuroscience and behavioral economics, (Behavioral Science) which characterize the dominant role emotions have in how we think about and make decisions regarding money. It understands why most people would rather go to the dentist than deal with their finances and how best to engage them. Then, using advanced analytics and AI, it creates situationally relevant and emotionally activating money-related scenarios (Sparxs), individualized and curated to each persons’ unique situation and concerns.

To learn more about the benefits that credit unions like MSUFCU have achieved through behavioral banking with Exagens’ MoneySparxs, click here.

Leveraging tech to improve financial access and literacy

It is in this way that Maxim and MSUFCU have become one and the same after 16 years, with a joint path for progression. As Maxim puts it: “Our mission and focus now is to increase financial access, increase financial literacy, and among many of the other things we are trying to do, build up our communities, making them a place people want to live, work, and enjoy.

“This gives me an aim to build innovations around these values, putting our technological focus into ways of serving our communities and ultimately our members.”

With the spread of fintech innovation on an ever-upward trend, industry-wide conditions are perfect for Maxim and MSUFCU to achieve their goals. Many

“THE GOAL IS TO CREATE NEW PRODUCTS THAT TAKE ADVANTAGE OF ALL THESE NEW INNOVATIONS THAT HELP YOUNGER MEMBERS GET THE PRODUCTS THAT ARE THE RIGHT FIT”

BENJAMIN MAXIM CHIEF DIGITAL STRATEGY & INNOVATION OFFICER, MSUFCU

fintechs are designed to offer ways of improving financial access, which Maxim leverages to support underserved areas of the credit union’s different communities.

“At MSUFCU we have a lot of student accounts. The question is how do we keep them interested and engaged including after they graduate? How do we get them excited about credit unions when they think all they need is a Venmo instead of a bank account?

“For me, the goal is to create new products and digital member experiences that take advantage of AI, machine learning, blockchain, and other emerging technologies that help personalising the experience for younger members (and really all members) to get them products that are the right fit and are the most convenient for them.”

Not content on providing ways to just take MSUFCU above the competition, for Maxim, it’s important to share new innovations and tech products with the wider credit union ecosystem.

“What’s unique about the credit union industry is that we like to share and collaborate, which for me is really exciting. It’s great to have a community, rather than having a singular focus, to talk about innovations, share ideas, and work together to move the whole credit union industry forward.”

Sticking to your roots

Although sharing innovations between banks and other financial institutions is typically considered counterintuitive, for Maxim, this is only natural for credit unions.

“Innovation is the core of what credit unions are. When credit unions first popped up as a result of anti-bank sentiment following the Great Depression, they were considered an innovative way to deliver financial services to people –members had control.”

“At MSUFCU, we were an early adopter of ATMs, and in the 1950s-1960s, we had one of the first female CEOs in the financial industry at the time. Today, our chatbot, Fran, is named after her.”

Serving students, faculty and staff, and alumni, MSUFCU sticks to its roots, having been founded by a selection of Michigan State University (MSU) faculty and staff

Finding financial solutions for all university campus goers is part of the ethos and not just MSU. MSUFCU has a partnership with Oakland University, too as Oakland University Credit Union, and has recently launched two digital-only brands to further support students in their life’s financial journey in AlumniFI and Collegiate Credit Union.

Personalising a service

Now serving a range of community sectors, including government, hospitals and local SMBs, and a wide range of ages from birth to over 100, the aim for Maxim and MSUFCU is to personalise services for each individual and business.

Of course, finding the right mix of products for a potential member is doable following consultation, but in an era of speed and technological innovation, Maxim says it’s important to know the right product for the right person soon after they walk through the door – data and technology help us do just that.

Partnering with over 30 fintech vendors and integrating their services has improved both the speed and efficiency of MSUFCU’s digital member experience.

Maxim says: “As financial institutions are a key enabler of people’s lives, we end up having a lot of data that we struggle to leverage on our own. One of the most innovative fintechs we’re working with is called Exagens, which specialises in the behavioural banking space. Their solution helps us unlock this bank-owned data and addresses a challenge common to all credit unions – engaging members beyond just transactions, to help grow their finances and the communities we serve.”

“They’ve become a core part of our experience strategy and together we’ve unlocked new value from our bank-owned

Revolutionizing the Credit Union Experience

Reseda Group is a catalyst for cutting-edge products and financial technologies to help credit unions build better for members and communities.

powered by

data, and provide some 90 different highly individualised money-related engagement scenarios to our members, to know and serve them better”

Just one of MSFUCU’s many partners, marrying fintech innovation with its own proprietary data has supported the credit union in growing its member base.

But, while leveraging tech will help find the right financial product mix for a member, another intuitive means of achieving this is improving the financial wellness of communities by providing access to financial education and promoting financial literacy of individuals and businesses.

A credit union made in the education system, MSUFCU provides the community with a large team of financial educators.

“We send them to schools and colleges, to be the education focus for students at all levels of understanding money management. We even lead a preretirement financial education service, education for buying a house, car, and various other budgeting tools.”

“OUR MISSION AND FOCUS NOW IS TO INCREASE FINANCIAL ACCESS, INCREASE FINANCIAL LITERACY, AND BUILD UP OUR COMMUNITIES”

BENJAMIN MAXIM CHIEF DIGITAL STRATEGY & INNOVATION OFFICER, MSUFCU

DID YOU KNOW...

Compliance front of mind

While implementing AI alongside machine learning and other tech innovations can boost customer satisfaction and backend processes, an important part of integrating fintech partners is to ensure technology is streamlined to the specific regulatory requirements partnering with a credit union entails.

Maxim notes: “When fintechs want to work with us, MSUFCU may be the only credit union they’re partnered with. So, along the way we are teaching them what it means to work with a credit union; what our regulations are, what our examiners care about; and what our compliance needs are.”

For Maxim, it is therefore important to make sure the onboarding process is robust and thorough. “We’ve built extensive compliance, risk and legal teams here at MSUFCU. So, for us, it’s imperative we thoroughly analyse any new partnership to make sure there are no data privacy concerns, no reputation risk, and if we’re using data, it’s important we’re permissioned properly.”

Nurturing an ecosystem

Establishing partnerships with fintech vendors is one thing, but nurturing an ecosystem, where each vendor plays into MSUFCU’s wider orchestral tune is another. While some vendors are commoditised, the “key differentiators”, as Maxim calls them (businesses tied to MSUFCU’s core banking solutions), are imperative to the credit union’s functionality.

“With a payment provider for example, like Visa, if they don’t do well or integrate into the broader scope of the credit union

then that stops us running our business. As a result, we focus heavily on getting the right balance between our different vendor partners. But, we want these integrations as it makes us a stronger company and helps make them a stronger partner.

“We really want to nurture these bonds and share them with the greater credit union industry. That’s why we formed our wholly-owned Credit Union Service Organization (CUSO), Reseda Group, to start making investments in fintechs, to make sure we have the right partners on board and be a strategic advisor for them too.”

A fintech future

With a new branch recently opened in Detroit, MSUFCU is keeping its commitment to an in-person credit union experience, alongside the implementation of tech to create an omnichannel customer experience.

Maxim hopes the credit union’s growth will only continue. He concludes: “One of our major focuses is on branching, opening up in new markets while improving the offering in the places we’re already in.”

“So, we’re all about scale at this stage and we plan to overhaul all our digital channels to better support the fintech partnerships we have. This will make it easier for us to play, test new technologies in our ecosystem and pull it back if it isn’t working.”

“As we rework our website, online banking, our iOS and Android apps, we believe at MSUFCU that this will enable us to move forward significantly with our technology offering.”

Augmentation, not replacement

Furthermore, Maxim is all too aware of the dangers that trudging too far down the tech path leads to — community disconnect. This is why when launching the likes of chatbot

Fran, Maxim is always careful to make sure “it’s an augmentation of customer service, not a replacement for it”.

He adds: “Our approach now is combining digital and human service together, to create an experience that is both digital and human. Look at the pandemic. We all learned how to use video technology because it was the only choice.

“Well, we now have a video banking solution, to more easily connect to our members to our employees. This is how we combine technology to better serve and connect with our members, not distance ourselves.”

“But you always have to measure this with the members’ needs and understand what their feelings are. Are they going to use it? Are they going to be receptive to it?”

One thing Maxim feels will further enhance the effectiveness of MSFCU’s customer experience is a further augmentation of the credit union’s chatbot with generative AI.

“Leveraging AI, we are able to improve our member service with our chatbot to answer simple questions. It’s just about framing what the right use case is for the technology. With Fran, you can even just type “agent” and it will instantly redirect you if that’s what you want to do, so it’s just about providing choice.”

WILL DIGITAL CARDS AND KILL OFF

AND DIGITAL WALLETS PLASTIC?

WRITTEN BY: ALEX CLERE

The advent of new technologies – including mobile wallets and smartwatches – as well as the residual effects of the COVID19 pandemic mean that digital payment methods are on the increase. But will that mean the end of cash or even plastic cards?

“When people discuss the future of payments they tend to predict the end of cash,” say Marion Laboure and Jim Reid, authors of Deutsche Bank research into the future of payments published in 2020. This is not a vision they agree with, but they do accept that, while cash will remain in circulation, “the coming decade will see digital payments grow at lightning speed”.

Indeed, Deutsche Bank’s research shows that consumers in six major markets intend to rely less on cash and cards in favour of contactless and mobile payments. Paying for goods using a cheque is expected to become less commonplace in five out of the six markets – only China sees a future for cheques as a payment method, the only country witnessing a net positive increase in all payment methods that Deutsche Bank asked about, perhaps reflecting the country’s emerging middle class and rising levels of disposable income.

Cash is expected to decline as a payment method in three of the six countries – the UK, France and Italy – but not in the US, China or Germany. The latter is among the

The way we pay for goods and services is changing rapidly. So will the rise of smartphones and smartwatch payments make physical cards obsolete?

FRAZER HARPER VP OF PAYMENTS PRODUCTS, DOJO

CATHARINA EKLOF CHIEF COMMERCIAL OFFICER, IDEX BIOMETRICS

PAT PHELAN MANAGING DIRECTOR UK&I, GOCARDLESS

DR STEPHEN WHITEHOUSE PARTNER IN OLIVER WYMAN’S RETAIL

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most cash-loyal nations in the world, with consumers preferring to pay using physical currency in over half of transactions.

Contactless payments are expected to become more popular, driven by the highest rates of growth in the UK, France and Italy. Smartphone payments and smartwatch payments will also rise in popularity; in both cases China is expected to see the highest rate of growth. Of course, this research does not take into account the boom effect experienced during the pandemic, when contactless payment methods were considered favourable due to hygiene and public safety considerations – so it’s possible that Deutsche Bank’s initial findings will actually be accelerated because of the pandemic.

“IT’S IMPORTANT WE DON’T EXCLUDE PEOPLE AS A CONSEQUENCE OF TECH INNOVATION”

FRAZER HARPER VP OF PAYMENTS PRODUCTS, DOJO

Will digital wallets and payment cards replace plastic? The obvious question, then, is whether emerging payment methods will replace the old-fashioned way of paying for goods. “Technologies such as digital wallets, virtual cards and embedded finance are already replacing cards,” proclaims Pat Phelan, Managing Director UK&I at GoCardless.

“You don’t need to look far to see it happening – walk onto public transport and see people tap and go with their phones at the barriers, or use their device to pay for dinner at a restaurant. It’s only a matter of time before plastic cards are redundant. However, current payment options are mostly still linked to a physical payment card, even if that card never leaves the wallet. It’s likely this will change too, particularly if and when these digital wallets become linked directly to a user’s bank account or other payment methods, leaving the payment card fully behind.”

However, not everybody is so convinced. Some observers believe there is room for plastic in a digital economy, even if in small quantities. “Digital technologies may one day replace physical cards, but this isn’t likely to be anytime soon,” says Frazer Harper, VP of Payments Products at Dojo.

Although there is unquestionably appetite for digital payments, there are still drawbacks to the technology that could prove to be deal-breakers. “Not only is it a payment method reliant entirely on device battery life, it’s also one that could leave people behind,” Harper continues. “It’s important we don’t exclude people as a consequence of tech innovation – and with traditional card usage still high, we see these physical cards playing a key role for the mid-to long-term.”

“IN 10 YEARS, CARD PAYMENTS WILL BE FASTER, SAFER AND MORE DIGITAL”

DR STEPHEN WHITEHOUSE PARTNER, OLIVER WYMAN’S RETAIL AND BUSINESS BANKING PRACTICE

This is something that Dr Stephen Whitehouse, a partner in Oliver Wyman’s Retail and Business Banking practice, concurs with. “While digital finance is on the rise, plastic cards will likely stick around for a while, especially in areas where digital solutions are less accessible or accepted,” Whitehouse says.

Will biometrics become cards’ security standard?

Despite their enduring popularity, there are still areas where the physical payment card could evolve. One of the most exciting,

particularly from a fraud perspective, is biometrics. This is a catch-all term used to refer to several different technologies – including fingerprint recognition, which is already popular but expected to grow in the coming years; facial recognition, which is benefitting from the improved reliability of AI; voice recognition and voice authentication, which, inspired by the popularity of virtual assistants, are also on the rise; and iris scanning, an emerging technology that takes advantage of the uniqueness of the iris, the colourful part of the eye surrounding the pupil.

Biometrics provide a fine balance between convenience and security. Recent research from GoCardless shows that nearly 70% of consumers would abandon a checkout process if it was overly complicated, while 80% would abandon the process if the security arrangements didn’t feel safe enough. This means biometrics can tick off two important boxes for consumers.

“Businesses can enter this ‘goldilocks zone’ by providing consumers with the ability to make a payment using simple biometrics, such as fingerprint or facial recognition,” GoCardless’ Pat Phelan says. “Most of the time this can be easily done, and on a device that payers use all the time such as a smartphone.

“Looking ahead, we believe consumers will become even more interested in noncard payments that have extra security built in. One example is open banking payments, which have seen volumes nearly triple in just one year. These payments use bankgrade security, requiring consumers to log into their online banking platform – often with biometrics – before they can make a payment. This hurdle is much harder for fraudsters to overcome compared to entering stolen card details into a checkout. It makes open banking payments more appealing for fraud-conscious consumers.”

Biometrics is the future of card security, believes Dojo’s Frazer Harper: “In a decade’s time, I see a world where biometrics such as a person’s face or their fingerprint becomes the

primary method of authentication, providing access to funds without the need for knowledge-based card numbers and PINs.”

And finally, Catharina Eklof, Chief Commercial Officer at IDEX Biometrics, tells FinTech Magazine: “Following an increase in demand for card payments, and more specifically contactless payments, biometrics have become an unparalleled means of authentication. As user behaviour changes, so do the standards for user protection. Fingerprint biometrics can provide near-instant authentication of payments and identity, making consumers’ lives more convenient and providing them with more choices for confirming their identity. With definitive advantages to both users and issuers, biometric payment cards

have the potential for exponential growth well-beyond 2023.”

What does the future hold in store for card payments?

Our evolving payment habits, coupled with the scope for greater use of biometrics, mean that the card payments industry could be completely reshaped in the course of the next decade. But there are still things holding us back from greater adoption.

These can be categorised into three buckets, Frazer Harper believes: “Regulation, while acting as a key guardrail, will always slow advances in technology while the industry ensures it’s being deployed in the right way. Consumer adoption always takes time, as there’s a requirement to educate

“I SEE A WORLD WHERE BIOMETRICS SUCH AS A PERSON’S FACE OR THEIR FINGERPRINT BECOMES THE PRIMARY METHOD OF AUTHENTICATION

FRAZER HARPER VP OF PAYMENTS PRODUCTS, DOJO

HOW IS OPEN BANKING DISRUPTING THE OUTLOOK FOR PAYMENT CARDS?

By Todd Clyde, CEO of Token.io

Open banking-enabled account-to-account (A2A) payments might not kill cards entirely – but the threat they pose is indisputable. A2A payments has emerged as a powerful contender and is claiming volume from cards. In Europe, credit and debit cards’ combined share of ecommerce transaction value is forecast to decline from 40% in 2022 to 35% in 2026, as analysts predict a bold future for A2A payments (often called ‘pay-by-bank’).

A2A payments move money over national clearing systems. 74 countries already have, or are, in the process of upgrading these systems to instant or realtime. This trend, combined with the easier access to these systems that open banking enables, is a catalyst for the emergence of a next-generation and lower-cost network for processing payments.

For some time, merchants have been sounding the alarm over rising card fees. Pay-by-bank presents an attractive, lowercost alternative. A2A payments also outperform cards when it comes to UX. Consumers approve payments directly in their banking app, benefiting from bankgrade security with a smoother payments experience.

Merchants also benefit from instant settlement and an unparalleled ability to maximise acceptance. A2A payments can be used by anyone with a bank account, and now also deliver better success rates than cards in many markets.

users around new technologies and facilitate change around existing habits.

“Finally, there’s always work to do to build trust when we’re discussing new technologies around payments. How can we demonstrate the new tech is safe and secure to build that trust? The combination of all three of these factors always takes time on a populationwide scale.”

Despite these immediate obstacles, our experts still believe the future looks promising for the card payments sector. “In 10 years, card payments will be faster, safer and more digital,” predicts Dr Stephen Whitehouse. “Picture biometrics replacing PINs, digital wallets becoming the norm, and plastic cards dwindling – but persisting in tech-limited regions. Expect a digital-first, security-focused and highly convenient payment world.”

Pat Phelan continues: “We expect to see card payments decline relative to bank-based payments. As consumers and businesses, we hold most of our money in our bank account, and as technology continues to make it easier to move money directly from one account to another, we’ll all realise the benefits – namely, cheaper, faster and more secure payments.

“We’re not the only ones who believe this. Just look at the number of card players that are wading into this space; Visa and Mastercard are both, for example, exploring opportunities in bank payments. Over time, it’s likely that others in the card ecosystem will develop some kind of bank payment proposition.

“From a consumer perspective, the built-in security and convenience of bank payments will drive further adoption. We’re already seeing a move away from physical cards, and this will continue.”

A history of digital transformation within insurance

PRODUCED BY: JAKE MEGEARY WRITTEN BY: ALEX CLERE

history

When a company has been in business for almost 150 years, you would expect to encounter some change along the way. Founded in 1875, HSB Canada started life at a time when pressure boilers were the primary engine powering equipment and machinery in industry across Canada.

The technology was relatively new and explosions were quite common, until companies like HSB Canada started deploying engineers to routinely inspect this prone equipment. At the time, this was an extremely novel approach, but the insurance industry has come a long way since 1875 –and HSB Canada with it.

Today, the Toronto-headquartered business provides inspection, risk management and IoT technology services, as well as insuring a number of specialty lines, including equipment breakdown cover – a nod to the company’s heritage, which is still reflected in its logo – as well as cyber insurance cover, a huge area of need in an increasingly volatile world. Since 2009, HSB has been a part of the Munich Re Group, giving it access to a wider pool of expertise –and the company acknowledges that talent is one of the things that sets it apart.

“The people here are one of our biggest differentiators,” proclaims Mike Scarbeau, Vice President Information Technology at

HSB Canada. “We have a lot of fantastic subject matter experts who are, I would say, the de facto experts in Canada, particularly on the inspection and engineering side. There’s a lot of great talent that has been brought into the business, so it’s a really exciting time to be here.”

Becoming part of Munich Re 15 years ago – the latest chapter in a long and storied history for the business – has only helped to accentuate that. “You certainly feel you’re part of a bigger group that has some amazing talent across the globe,” Scarbeau adds.

How has insurance evolved in 148 years?

A lot of things have changed since HSB Canada was founded in 1875. There have been seven British monarchs (from Victoria to her great-great-great-grandson Charles III); 13 new American states; and 23 prime ministers of Canada (all but one term, in fact, as the company was started just eight years after the formation of the country).

A lot has changed from a technological viewpoint, as well as a social one, as HSB Canada’s Vice President Client Solutions and Innovation, Lasith Lansakara, explains: “I think there has been an evolution of technology with the introduction of connected technology, like internet of things (IoT) devices. There has been quick transfer of data, and there’s been increased proliferation of data available.

HSB Canada has evolved as a business and kept pace with societal changes and shifts in consumer demand during its near-150-year

“From an insurer’s perspective, it’s allowed us to create new products and assess risks better. I think those changes in technology, and even an evolution in consumer habits, are shifting the nature of risk. So if you take cyber insurance for example, a couple of years ago a hacking incident would have meant business interruption for a couple of days. Today that has evolved, and now there is the risk of extortion due to stolen data.

“It’s that evolution of the nature of risk that has created the need for these new products and requires insurers to be a bit more agile,” he says.

The way that consumers transact has also changed – not just in terms of the

“Today the biggest cyber threat to businesses is cyber extortion or ransomware. The exposure for your customers and as a business are significantly higher”

LASITH LANSAKARA VICE PRESIDENT, CLIENT SOLUTIONS AND INNOVATION, HSB CANADA

propensity to pay with coins and notes, but also what level of service they expect from their insurer. “They’re looking for a seamless, frictionless experience,” Lansakara says.

This evolution has inevitably resulted in some side effects. There are upsides, sure; the connectedness of our world results in improved access and availability of data, with sensors allowing insurers to gather data in real time and mitigate risks sooner and faster.

But there are also downsides. “It’s created another layer of risk, and it’s an area that is constantly changing,” Lansakara continues. We have more IoT devices in our homes and our work premises than ever before

LASITH LANSAKARA

TITLE: VICE PRESIDENT, CLIENT

SOLUTIONS AND INNOVATION

INDUSTRY: INSURANCE

LOCATION: CANADA

Lansakara leads client-focused innovation and engagement for new solution development and adoption focusing on enhancing strategic engagement with clients. He acts as an innovation facilitator within HSB Canada to support achieving its ambitious growth and development objectives. Lansakara oversees the New Solutions practice and the Digital Distribution team.

Lansakara joined HSB Canada with over 10 years experience in the insurance industry and prior to joining HSB Canada, Lansakara was National Commercial Insurance Practice Leader, Senior Manager with a leading global consulting firm.

EXECUTIVE BIO

Lansakara holds a Bachelor of Science degree in Computer Science from Illinois Wesleyan University, as well as a Master of Business Administration from New York University.

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– over 25, in fact, in the average American household, according to research published by Deloitte. This creates an additional vulnerability that cyber criminals are constantly seeking to exploit.

“Today the biggest cyber threat to businesses is cyber extortion or ransomware,” Lansakara says. “The exposure for your customers and as a business are significantly higher. This is where I think insurers, and even various technology vendors, need to focus their efforts to solve the evolving risk challenges.”

The state of digital transformation in Canada

Despite being over 200 square miles larger than the US, Canada is often overlooked in favour of its older, more southerly neighbour. The country sometimes does not receive the credit or attention that it deserves, particularly for big discoveries or breakthroughs – insulin being one of the most famous examples, discovered by scientists at the University of Toronto.

So are we overlooking the progress that Canada’s insurance industry is making towards digital transformation? In short, no, say Scarbeau and Lansakara, who believe that the Canadian insurance ecosystem lags behind comparable countries when it comes to digitisation.

“When I talk to other CTOs or CIOs, I feel like some common problems are apparent in the trends and transformational goals that they have. But everyone seems

“We intend to be a dominant player in the cyber insurance space”

MIKE SCARBEAU ICE PRESIDENT, HEAD OF INFORMATION TECHNOLOGY, HSB CANADA

MIKE SCARBEAU

TITLE: VICE PRESIDENT, HEAD OF INFORMATION TECHNOLOGY

INDUSTRY: INSURANCE

LOCATION: CANADA

Scarbeau has extensive experience in senior management roles leading and developing high performing teams and worked as a Director of IT at a large mutual insurance organization before joining HSB Canada. Prior to that, he worked within the same capacity in the banking and the provincial government. The Board of Directors appointed him Vice President in 2021.

EXECUTIVE BIO

to be at a different place in the journey,” Scarbeau tells us. He accepts that most Canadian insurers are not at the fully digitised end of the spectrum.

“I think the Canadian market is probably behind the curve a bit,” Lansakara adds. “If you think of things like digital quote and bind rate comparators that are available, the UK certainly leads the pack. The US, I’d say, is not there but definitely catching up. I think Canada is gradually moving there.”

He believes that the company’s global footprint – including the beneficial relationship it shares with Munich Re –means that HSB Canada is able to incubate ideas faster and create opportunities for new technologies or new insurance models, like embedded insurance, faster than locally grounded players can.

Lansakara has a theory why Canada is looking up the track towards other countries. “As with a lot of digitisation journeys, there’s a bit of a lag until you see the results,” he says. “Markets like the UK and US probably made those investments a couple of years before we did here in Canada, but I believe the players here are feeling that competitive pressure [to evolve].”

Transformation is slowly happening, driven by relentless consumer demand, and both our interviewees are keen to see what future transformation this causes in the Canadian insurance landscape. Perhaps in another 148 years, future generations will be scoffing at the notion of cyber insurance or scratching their heads about the way cyber risk is insured.

How is HSB Canada adapting to change?

As the custodian of all of HSB Canada’s technology initiatives, it falls with Scarbeau to orient the business’ tech stack for future success. “In terms of the IT space, I’m constantly looking for opportunities to adopt the philosophy of low-code and no-code, self-service for the business, and not becoming too reliant on IT all the time,” Scarbeau tells us. “But we have to have a really solid foundation to do that.

“Thankfully for us here at HSB Canada, we’ve already gone over to the cloud and we’re on scalable infrastructure that affords that type of responsiveness.”

Lansakara believes the insurance industry is “on the cusp of drastic disruption.” It is constantly evolving, but right now it has reached an inflection point, he says.

“The current situation creates the opportunity for insurers to provide offerings that predict, prevent and mitigate risk before it even happens,” he says, referring to the prevention-led models that have become ubiquitous across the insurance sector as it evolves.

“That means insurance is no longer a paper product or a financial recovery when an incident happens; it is about avoiding an incident in the first place, and then if it does happen you know you are covered. That’s what we believe at HSB and that’s why we are making all the investments we are making in IoT capabilities, data and our technology offerings.”

That’s why HSB Canada is investing majorly in automation, a “game changer” that allows insurers to reduce time spent on manual processes within the claims journey, providing a “leapfrog” effect that propels businesses forward in time. Emerging technologies within the field of automation, like generative AI, will assist underwriters with decision making, expediting the process and increasing the quality of risk assessment.

So what will the future hold in store for the Toronto-based insurer? “We are going to continue monitoring the shift in

risk landscape and look to strengthen our offering in the space. We intend to be a dominant player in the cyber insurance space,” Lansakara says.

“We are also going to continue evaluating traditional risk products and see how we could better take advantage of some of this IoT technology, if there are opportunities to embed some of it in insurance offerings so data received becomes part of the underwriting process or part of the coverage solution.”

Scarbeau concludes: “From an IT perspective, we’re continuing to scale our cloud infrastructure, and our real-time digital capabilities support that. For me, it’s all about working closely with and his team, prioritising the best opportunities, and really trying to find ways that we can accelerate the innovation trend internally.

As things evolve, we’re continuously looking at the skills we have, what frameworks we’re using in IT, and consistently shifting on the back end in the parts of the business that most people don’t get to see.”

“Working at HSB Canada, you certainly feel you’re part of a bigger group that has some amazing talent across the globe”

LASITH LANSAKARA VICE PRESIDENT, CLIENT SOLUTIONS AND INNOVATION, HSB CANADA

ASSESSING THE ADOPTION OF BLOCKCHAIN FINANCIAL SERVICES

ADOPTION

IN SERVICES

WRITTEN BY: LOUIS THOMPSETT

Blockchain has been somewhat of a quiet revolutionary. Essentially a distributed database containing an ever-growing list of ordered records – blocks –its introduction as the enabler of crypto asset trading heralded the beginning of decentralised finance.

But, while blockchain and cryptocurrencies may appear synonymous with one another, the truth is blockchain’s reach is far more extensive – and can be used to monitor supply chains, create digital IDs and enable data sharing.

So, while blockchain’s association with crypto is well-established, the question remains: is it being used to its full potential in the wider financial services sector?

Understanding blockchain

To gauge blockchain’s potential in finance more broadly, it’s important to first understand how it works.

A board member at the Casper Association, Ralf Kubli likens blockchain to a series of remote computers “working together to create a trustless independently verifiable, decentralised ledger”.

He continues: “Every computer on the network, or ‘node’, can see every transaction that has ever occurred, and all of this information is encoded cryptographically, decentralised so that any participant can simply run the maths themselves, and confirm that all values are correct.”

Blockchain is the backbone of crypto asset trading platforms, but how much further can its usage go in the broader financial services industry?

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OF REAL-WORLD ASSETS COULD ONE DAY BE A MULTI-TRILLIONDOLLAR

YUVRAJ SIDHU PRINCIPAL CONSULTANT, LAB49

While for cryptocurrency, certain nodes on the network – miners – are tasked with ordering batches of transactions into blocks (rewarded for their efforts with newly created crypto assets), Kubli notes that blockchain doesn’t have to be used this way. “It can be a ledger for virtually any type of data.”

Blockchain’s reach across the financial industry

Kubli continues: “While financial institutions such as BlackRock, Siemens and even HSBC are touting tokenisation as a paradigm shift for the economy, with vastly improved systems for delivery versus payment (DvP) settlements, current tokenisation platforms are not digitising the underlying liabilities or cash flows tied to the assets themselves.”

Most tokens have a simple embedded PDF that defines its terms and conditions, meaning human intervention is still required to calculate cash flows, which, according to Kubli, “can introduce errors and discrepancies, and also prevents this digital capital from being truly automated”.

As a result, Lab49’s Principal Consultant Yuvraj Sidhu admits the mass adoption of blockchain in traditional financial services is still far off, “especially in the institutional landscape, [where] regulatory uncertainty and questions regarding unproven tools and infrastructure have created barriers”.

Yet, despite these barriers to adoption, Sidhu feels a need for secure, accurate and instantaneous settlement in the financial services industry is driving many banking institutions to explore ways of leveraging the benefits of blockchain.

“TOKENISATION

MARKET”

He adds that blockchain adoption can proliferate across traditional services once four key barriers are overcome: privacy preservation, regulatory clarity, standardisation, and scalability.

For Peter Greiff, Data and Analytics Team Leader EMEA at DataStax, the issue of blockchain’s slow cross-market extension is simpler; it’s a matter of trust, or more specifically, too much trust. “Using blockchain is ideal when there is less trust between the parties involved.

“In finance, the number of use cases where all those transactions take place

YUVRAJ SIDHU PRINCIPAL CONSULTANT, LAB49

PETER GREIFF DATA AND ANALYTICS TEAM LEADER EMEA AT DATASTAX

RALF KUBLI BOARD MEMBER AT THE CASPER ASSOCIATION

“BLOCKCHAIN CAN’T MEET SOME OF THE TRANSACTION THROUGHPUT OR ANALYTICS REQUIREMENTS THAT COMPANIES HAVE”

PETER GREIFF DATA AND ANALYTICS TEAM LEADER EMEA, DATASTAX

without trust is actually small. Banks and financial institutions rely on compliance regulations and backing by governments, which is why they are trusted.”

So, while Greiff can see blockchain being useful for records over time and providing tracking for transactions, its use for secure monetary transactions isn’t strictly necessary at established financial institutions.

Bringing blockchain to finance

Given blockchain’s use in traditional financial institutions could look markedly different from its function as a fraud safeguard when

it comes to crypto, financial services firms are understanding the wider potential of blockchain “slowly but surely”, according to Sidhu.

However, before this potential can be truly actualised, Kubli feels “the implementation of open banking standards, ultimately introducing ‘smart financial contracts’ as a means to remedy” the current barriers to adoption, will enable legacy institutions to begin implementing blockchain-based innovations.

He adds: “Ensuring standardisation via smart financial contracts will enable things

like an entire mortgage process, including the underlying obligations, to be placed on the blockchain and become machine-readable, executable, and automated.

“This will bring about the true financial potential that is currently missing, and even bring new stability to the existing finance world.”

The possibilities blockchain can bring to traditional financial services don’t stop there. Sidhu believes asset tokenisation will become “an effective way to automate the security issuance process and democratise access to previously illiquid asset classes”.

“Private equity is a good example –currently, private firms such as start-ups have limited options when raising capital. Tokenisation provides a pathway to open new markets and liquidity to these types of firms,” he adds.

Post-trading clearing and settlement, too, is something Sidhu feels blockchain can help innovate, calling the current process highly inefficient and fragmented.

“The industry currently spends over US$130bn annually in this area, so, unsurprisingly, organisations such as the Federal Reserve and Bank of England are experimenting with blockchain technologies to automate these processes.”

For Greiff, combining blockchain technology with distributed databases and streaming technologies will allow financial institutions to “get real-time updates for on-chain transactions, and the ability to apply analytics to that data in real-time as well”.

Scaling blockchain: the drawbacks

While the scope for blockchain’s use at traditional financial institutions is evident, should barriers to adoption be overcome, it will need to scale significantly from its current models of use.

With this comes problems, though. Crypto data mining has faced criticism for the amount of energy it consumes through the traditional Proof of Work (PoW) model employed by the likes of Bitcoin and other crypto networks.

However, the more energy-efficient Proof of Stake (PoS) mining model could be the way forward for financial institutions. Crypto trading platform Ethereum recently switched from the traditional PoW to a PoS model and reported a 99% drop in the amount of energy needed to secure the network.

STANDARDISATION

Use more image captions as often as possible

“ENSURING

VIA SMART FINANCIAL CONTRACTS WILL ENABLE THINGS LIKE AN ENTIRE MORTGAGE PROCESS, INCLUDING THE UNDERLYING OBLIGATIONS, TO BE PLACED ON THE BLOCKCHAIN”

RALF KUBLI BOARD MEMBER, THE CASPER ASSOCIATION

THE FUTURE OF BLOCKCHAIN

So, while blockchain’s path to mass use in traditional financial services is still a bit murky, the standardisation of blockchain-powered financial assets, such as CBDCs, is something Kubli feels we are destined to see.

He adds: “As regulations tighten, any assets that don’t embrace standardisation will be at risk of noncompliance. There could be exceptions, of course, but any projects that want to be adopted by major financial players will likely adopt this approach.

“Once implemented, tokenised financial assets can bring in improved liquidity and new forms of financing for the entire economy.”

Sidhu agrees, saying the timing of when tokenised financial assets hit the market will depend on the institutional sector. “Wall Street firms such as JP Morgan Chase, BlackRock, Fidelity and Goldman Sachs are defining their approach to blockchain technology, while 114 countries including the UK and US are exploring CBDCs.

“Tokenisation of real-world assets could one day be a multi-trilliondollar market. However, if blockchain and crypto are to become the norm in the future, strides in regulatory harmonisation, standardisation and technology are required.”

Notwithstanding the perks of PoS models, a switch in mining models is just one barrier to scalability. As Greiff notes: “Blockchain can’t meet some of the transaction throughput or analytics requirements that companies have.

“For example, Bitcoin has around 19.3m coins and sees 500,000-650,000 global transactions per day. Ethereum reached a maximum of 1.9m transactions on one day but tends to be around the 1.2m transactions per day level globally.

“In comparison, banks, retailers and payment systems providers cover billions of transactions per day, which is an order of magnitude higher.”

To reach the next level of scale, blockchain platforms must innovate ways to

carry out real-time analysis on a far greater number of transactions, to meet anti-money laundering and anti-fraud requirements.

The future of blockchain

So, while blockchain’s path to mass use in traditional financial services is still a bit murky, the standardisation of blockchain-powered financial assets, such as CBDCs, is something Kubli feels we are destined to see.

He adds: “As regulations tighten, any assets that don’t embrace standardisation will be at risk of non-compliance. There could be exceptions, of course, but any projects that want to be adopted by major financial players will likely adopt this approach.

“Once implemented, tokenised financial assets can bring in improved liquidity and new forms of financing for the entire economy.”

Sidhu agrees, saying the timing of when tokenised financial assets hit the market will depend on the institutional sector. “Wall Street firms such as JP Morgan Chase, BlackRock, Fidelity and Goldman Sachs are defining their approach to blockchain technology, while 114 countries including the UK and US are exploring CBDCs.

“Tokenisation of real-world assets could one day be a multi-trillion-dollar market. However, if blockchain and crypto are to become the norm in the future, strides in regulatory harmonisation, standardisation and technology are required.”

UPHOLDING VALUES AND FURIOUS TIDE

VALUES AMID A FAST TIDE OF INNOVATION

WRITTEN BY: LOUIS THOMPSETT

PRODUCED BY: JAKE MEGEARY

Credit Union of America’s David Germann and Jon Douglas discuss the importance of upholding values while keeping pace with technology innovation in finance

If you would have told Jon Douglas, Chief Information Officer at Credit Union of America, that his career would have taken him into finance after a 20-year stint in the US Air Force, he wouldn’t have believed you. But, after a career spent supporting IT and cybersecurity “from every level starting at the help desk all the way up to global communications and security,” Douglas knew his time in the military had to end at one point or another.

Initially moving into education in the state of Kansas – also the home of Credit Union of America – Douglas joined Chief Lending Officer David Germann and has “loved every minute” of his 16-month tenure, in which he manages data, business and technical analysis.

Germann has a more orthodox route into finance, cultivating an extensive career in finance and recently entering his 36th year in the industry. Working at a company for 25 years after leaving college, Germann admits his story “is probably something similar to what you hear a lot of in the news,” being “very successful one Monday after having a record month” before being told “at 4pm on Tuesday that the company had been sold, and I lost my job.”

Although a little down on his luck at first, reminiscing how “25 years all of a sudden meant nothing,” it was here Germann learned some valuable lessons. Moving into corporate banking, he soon knew working

An immersive brand experience, the interior of every CUA branch provides a cohesive, Friendly experience

Celebrating success, the CUA team applauds the accomplishments of students at the PANDO awards ceremony

in a “regimented way” was not for him, and after investigating credit unions, saw “the planets align” in a field of his interest – credit unions – with an opening at Credit Union of America. He says he “couldn’t apply fast enough.”

Knowing the role is right

Chief Lending Officer of Credit Union of America for over eight years now, Germann has certainly found a role fit for him. As he puts it, the real joy of the role is being “empowered to make a difference.”

While admitting this may sound like “a tagline, it’s not marketing. I am able to empower our branch managers, staff,

“The fintech industry is moving so quickly, the horse has bolted out of the barn. It’s not slowing down but getting ever-faster”

DAVID GERMANN CHIEF LENDING OFFICER, CREDIT UNION OF AMERICA

Empowering young minds through literacy, David Germann shares the joys of reading with students as part of CUA’s partnership with the PANDO initiative

employees and myself.” This comes with responsibility too, being both the “arsonist and firefighter,” because if the credit union puts out bad loans, they’ve got to be sorted out.

Despite the responsibility, it’s empowerment and trust that Germann takes pride in. “Whatever we feel is in your best interest that would help you, we’re empowered to do that. And in our business, that’s very rare. Most people are not empowered to truly make a difference. That’s what I love the best and what I can’t wait to do every day. But the thing that wakes me up in the morning is that I can’t wait to go and see my coworkers.”

DAVID GERMANN

TITLE: CHIEF LENDING OFFICER

INDUSTRY: BANKING

LOCATION: UNITED STATES

David Germann is a highly accomplished banking professional with over 36 years of experience in the financial industry. As the Chief Lending Officer, he brings a wealth of expertise and a proven track record in leading lending strategies for major financial institutions.

Throughout his career, David has demonstrated exceptional proficiency in managing all aspects of lending operations, including credit risk assessment, loan portfolio management, and regulatory compliance. His comprehensive understanding of market trends and economic factors enables him to make informed decisions that drive sustainable growth and mitigate risks.

EXECUTIVE BIO

David’s leadership skills have been instrumental in building and managing high-performing lending teams. He has successfully developed and implemented innovative lending programs, resulting in increased loan origination, improved profitability, and enhanced customer satisfaction. His strong interpersonal and communication abilities foster collaborative relationships with key stakeholders, including executive management, regulators, and clients.

A work ethic built on values

This is key to a great working relationship for Germann, who has “never worked at a place where people who work together socialise” as they do at Credit Union of America. The same is true for Douglas, who says “getting up in the morning is not a chore” when coming to the office; “the culture and people make it a wonderful place.”

Years spent in the military have taught Douglas to value community in the workplace, “a sense of worth and having great collaboration,” which he has found at Credit Union of America. On the other hand, Germann’s values stretch back to childhood, growing up on a farm.

He remembers: “We had cattle, we had horses, we planted crops. Cattle are fed in the morning, cattle are fed at night, they’re

“We want to embrace as much tech and AI as we can, but it’s so important to undertake the right due diligence too”

DAVID GERMANN CHIEF LENDING OFFICER, CREDIT UNION OF AMERICA

fed in a snowstorm, and they’re fed when it’s 100 degrees. They’re fed whether or not you feel good, whether you’re sick. And so I think the work ethic I developed that influenced me the most in this world came from that.

“Every day you get up, every day you work, and every day you have a job to finish before you’re done.” This ethic has helped Germann consistently achieve, because in lending –much like farming – “you’re only as good as your last month.”

Sustaining a legacy, then growing it

A consistent drive for growth is important when both maintaining and expanding a credit union that has been an ever-constant in Kansas since its inception in 1935. Created by a science teacher in a janitor’s closet at a local high school, with an initial 20-25

members putting in US$5 each for loans (or so the story goes), Credit Union of America has become one of Kansas’ largest, with US$1.5bn in total assets.

While aiming to stick to its roots as a credit union for teachers, Germann notes today the mission is to be “everybody’s credit union.” For Germann, the key to expanding the reach of Credit Union of America is using technology.

He adds: “We never want to forget where we came from even with our growth. But we are a large credit union in Kansas and there’s no reason to be held by the state borders. We want to grow and become one of the largest credit unions in the Midwest. The fear is when you use technology to grow you forget who you are, and we never want to forget who we are.”

Preparing the leaders of tomorrow, CUA management engages in mock interviews at local schools to help guide students on their paths to success

Embracing fintechs

Embracing fintechs and the advancements in technology they bring is, for Douglas, a reaction to consumer demand. “We want to meet our customers where they are, creating an environment where they can get to us without having to come to us.”

Partnering with new vendors has already helped Credit Union of America to open online accounts, implement phonebot technology and get parameters in place to create a data warehouse, from which new fintech vendors can integrate with one another and have immediate access to pools of data.

It’s not just about embracing the technological demands of customers today, as Germann points out when he joined Credit Union of America in 2015: “We had just under US$600m in assets then; now in 2023, we’re at US$1.5bn in assets. We have more than doubled in the last eight years as technology has been implemented.”

Not one to shy away from a forwardthinking prediction, Germann believes the growth he has seen since joining the credit union “will be slow compared to the next five years.”

In fact, his claim is far from bold. As the proliferation of technology continues across the financial sector, the key for Credit Union of America now is to ensure “that member experience remains no matter where they are,” according to Douglas.

Part of this is curating the right omnichannel approach, facilitating both the digital and in-person needs of credit union members. Douglas adds: “We’re trying to bring in technology, utilise and build that technology so that the member that comes into the branch and the member that does things online have the same experience with us, regardless of how they interact with us.”

To achieve this omnichannel approach, Douglas feels it important to not “get too far ahead and push away the face-to-face interaction” members are accustomed to.

EXECUTIVE BIO

JON DOUGLAS

TITLE:

CHIEF INFORMATION OFFICER

INDUSTRY: BANKING

LOCATION: UNITED STATES

Jon Douglas serves as the Chief Information Officer (CIO) at Credit Union of America, bringing a unique blend of military discipline and technology leadership to his role. His experience spans more than 24 years in the information technology industry, fortified by a notable 20-year active-duty career in the U.S. Air Force.

Jon spent two decades serving in the Air Force. He took on diverse roles in systems operations and IT management, demonstrating exceptional leadership while navigating the complexities of strategic technology operations under pressure.

During his military service, Jon furthered his education at the University of Maryland Global Campus (UMGC), earning an MBA and an M.S. in Cybersecurity. These additional credentials helped him transition seamlessly into the education industry, and eventually, the financial services industry, where he has become known for enhancing cybersecurity, optimising IT operations, and driving digital transformation.

Jon Douglas (Right) and the CUA team attend the Leukemia & Lymphoma Society (LLS) Gala to recognise the remarkable efforts that LLS has made towards the battle against blood cancers

Moving fintech forward

However, while it’s important to keep a balance between the latest technology and maintaining personal points of contact for members, technology can be used extensively to support and grow both sides.

The key to maximising technology in the backend for Douglas is using data in the right way. “Working on our data warehouse is great because we can already know what a prospective member is looking for before they show up. We can get access to their transaction histories, and maybe they’re missing a loan service they didn’t know they could have. Using data in the right way with Arkatechture as our vendor helps us better tap into what a customer may need.”

The right use of customer data is important for members too, as Germann notes the credit union’s ability to now offer fast pre-approved loans, whether “it’s a US$40,000 car loan or a US$25,000 credit card. It also makes our employees’ lives easier, so they can focus on other things, and we’re seeing this grow our numbers, as it’s speeding up processing that would have taken far longer before.”

“For us, it’s asking how we can get even better implementation; how we are testing ourselves or using external entities to test us”

JON DOUGLAS CHIEF INFORMATION OFFICER, CREDIT UNION OF AMERICA

For Douglas, staying on top of the latest innovations is also incredibly important, partnering with vendors already using AI in their products, such as the chatbot that Credit Union of America employs. He notes the importance of AI in “building out our backend to analyse our data faster, and get those results and products back to members as quickly as possible.”

There is always scope for further innovation, as far as Douglas is concerned, particularly in regard to improved customer relationship management (CRM) technology services, which he hopes to improve at Credit Union of America soon. “We’re looking for that right CRM that can give us that single point of access and integrate all our different systems together in one.

“Having everything brought together in one place would really help our frontline staff so they’re not jumping back and forth between different systems. We’re trying to get the right vendor in place for that so we can further streamline our operations moving forward.”

Cautious innovation is good innovation

Getting the right vendor in place is not an undertaking to be taken lightly, as pointed out by Germann. “We want to embrace as much tech and AI as we can, but it’s so important to undertake the right due diligence too; we need to be very cautious.”

Douglas adds: “We have to hold any new vendor partner to specific standards. Are they keeping our members’ data safe when transiting and storing it? Are they accredited?”

Security concerns are just as important questions to answer at Credit Union of America for Douglas too: “For us, it’s asking how we can get even better implementation; how we are testing ourselves or using

“The fear is when you use technology to grow you forget who you are, and we never want to forget who we are”

DAVID GERMANN CHIEF LENDING OFFICER, CREDIT UNION OF AMERICA

external entities to test us to make sure we’re always improving our security posture as new technologies emerge.

“So in every area that we implement security protocols for, on the digital forefront, security is always front of mind as it should be. And we’ve got a great team here working on that. That’s what we will continue to do as we move forward.”

Enjoying the fruits of your compliance

Stringent security requirements and compliance needs shouldn’t detract from a business’ drive for greater digitalisation; the benefits of partnering with a fintech far outweigh the time to complete due diligence.

Using the example of fintech Clutch as one of Credit Union of America’s partners, Germann notes: “Clutch has helped us significantly in supplying instant quotes. It used to take months to find the right quote for our members but with Clutch, you just need to input a member’s cell number and the last four digits of their social security number, and it can pull up a car they bought and how much they owe on it, all in a secure way.

“So once you get security right, we and the members can enjoy faster processes and better loan offers.”

A fast and furious future

For Douglas, leveraging the innovations of partner fintechs will become ever more

Preparing the leaders of tomorrow, CUA management engages in mock interviews at local schools to help guide students on their paths to success

“fast and furious” over the next 12-18 months. “We’re bringing in fintech Narmi to update our account opening process, driving quicker wait times for our members and getting all integrated products set up and refined for our customers.

“The partnerships that we’ve created with those fintechs are already starting off on an awesome foot. And we’re excited to see that next evolution.”

This wait for the next evolution will not be too long at all, according to Germann. “Jon (Douglas) has policies written, procedures written and passed. But I think by the time they’re printed and published, Jon will be writing those policies and procedures, such is the speed of innovation before we get the next fintech partner on board. I think the time scale for innovation is closer to four or five months as opposed to 12 months, the industry is moving that quickly.

“The horse has bolted out of the barn. It’s not slowing down but getting ever faster. I actually think I’m misjudging the scope of innovation we’re seeing and the things that can be achieved over the next few months, particularly with the introduction of AI at so many fintech vendors. The speed of innovation in financial services has been rapid, and at the current rate it looks like this pace is set to continue indefinitely.”

MEETING CHANGING OF UNDERBANKED POPULATIONS

MEETING THE CHANGING NEEDS UNDERBANKED POPULATIONS

WRITTEN BY: ALEX CLERE

With many so-called ‘Western countries’ facing their own challenges right now – from high rates of inflation, riots and political unrest, to war on the continent of Europe – it’s easy to forget about the role that developed economies must play in contributing towards a fairer society.

Yet, at the same time, many developing countries are facing similar challenges –often leading to economic turmoil or the displacement of people. According to the United Nations, there is an “inequality crisis” that risks thwarting the economic progress of some of the world’s least developed countries.

A group of 46 countries, representing 14% of the world’s population, face “serious impediments directly hampering their ability to progress economically and graduate from the least developed country category”, world leaders warned in March. In fact, such is the size of the wealth gap, by the end of this decade the top 1% of the world’s richest people are expected to own two-thirds of the world’s wealth, with the bottom 50% today owning just 2%.

WHAT EFFECT HAS FINTECH HAD ON FINANCIAL INCLUSION?

Despite the obvious financial inequality that still exists, has the advent of fintech

The advent of fintech and a rise in smartphone usage is narrowing the chasm in respect of financial inclusion – but to what success, and at what cost?

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technologies made any difference on financial inclusion? Shanker Ramamurthy, Global Managing Partner for Banking at IBM, believes that it has.

He tells FinTech Magazine that the sector has “enabled access to financial services and products previously unavailable or inaccessible, reducing poverty and increasing economic growth.”

He cites the example of the Indian Government’s Digital India initiative, which aims to transform the country into a digitally enabled society. This has “significantly increased financial inclusion in India, particularly among the unbanked population,” Ramamurthy says.

“According to the World Bank, the percentage of adults with a bank account in India surged from 35% in 2011 to 80% in 2021, largely due to the government’s efforts to promote financial inclusion. It also provided women with the autonomy

to manage their finances, helping to narrow the gender gap from 17% in 2011 to insignificant in 2021 in terms of bank account ownership in India.”

But it’s not just India where fintech is making a difference; emerging fintech solutions have had a positive impact on developing economies in Africa, according to Babs Ogundeyi, CEO of Nigerian-founded finance app Kuda. In part, this is thanks to high smartphone penetration in developing countries; according to Deloitte, there is now a negligible gap in smartphone penetration between developed and developing countries.

“Countries like Kenya, Nigeria and South Africa are at the forefront of Africa’s fintech boom,” Ogundeyi says. “The continent is home to numerous fintech startups that are

“THE RISE OF FINTECH TECHNOLOGIES HAS UNQUESTIONABLY LED TO SIGNIFICANT IMPROVEMENT IN THE FINANCIAL FORTUNES OF DEVELOPING COUNTRIES”

SHANKER RAMAMURTHY GLOBAL MANAGING

PARTNER

FOR BANKING, IBM

driving innovation and economic growth. African fintech startups are taking advantage by giving their customers a level of access that traditional banks did not offer. This has increased financial inclusion, as building this digital infrastructure for less wealthy populations is paramount.

“However, it is worth noting that such infrastructure must be stable and available throughout developing economies in order to achieve true financial inclusion.”

WHAT MORE NEEDS TO BE DONE TO BOOST FINANCIAL INCLUSION?

Despite the fact that fintech has accelerated progress towards greater financial inclusion in emerging markets, there is still more that needs to be done to close the gap. Indeed, even in advanced economies, the situation is critical. Two-thirds of Americans live paycheck-to-paycheck with little room to save money towards their life goals, for example.

In order to meet the needs of consumers in developing countries, service providers must first understand what those needs are. Taking Africa as an example, a portion of the diaspora has moved away in search of work or have been displaced – as is the case with volatile regions like Ethiopia, Eritrea and Sudan. This means low-cost remittances are a top priority right now, allowing African emigrants the opportunity to send money back home for family or friends.

Fintech still has the opportunity to address “financial exclusion, financial illiteracy and unequal access to education,” Shanker Ramamurthy says. “Blockchain, mobile banking and digital identity verification can help address financial exclusion by providing simple and accessible financial services to those who are currently excluded.

“INFRASTRUCTURE MUST BE STABLE AND AVAILABLE THROUGHOUT DEVELOPING ECONOMIES IN ORDER TO ACHIEVE TRUE FINANCIAL INCLUSION”

BABS OGUNDEYI FOUNDER AND CEO, KUDA

“Gamification, chatbots and personal finance management apps can improve financial literacy by providing interactive and engaging tools that educate and empower people to make better financial decisions. And online educational courses and e-learning platforms help overcome barriers causing unequal access to education and provide affordable and accessible education to people worldwide.”

DO WE RISK LEAVING SOME VULNERABLE CONSUMERS BEHIND?

Much of the progress towards greater financial inclusion has been informed by high smartphone penetration rates. So, as

the world becomes increasingly digital, do we risk leaving vulnerable and disconnected consumers behind?

According to the World Bank, nearly twothirds of the world today is connected to the internet – but those figures belie the number of people, even in rich economies, who lack access. In the United States, for example, 8% of the population don’t have internet access (a segment that accounts for over 25m people); while in the entire eurozone, which covers a population greater than the US, the correspondent percentage is 13%. This shows that connectivity is still a global problem, not just a matter of developing versus developed economies.

HOW DO CULTURAL FACTORS AFFECT PROGRESS TOWARDS FINANCIAL INCLUSION?

By Shanker Ramamurthy, Global Managing Partner for Banking at IBM

Overall, fintech adoption in emerging markets has been growing rapidly, driven by factors such as increasing access to mobile phones and the internet, a large unbanked population, and a growing middle class. Some regions have been particularly active in fintech adoption.

Cultural factors such as the extent of smartphone usage and cultural norms can significantly affect the needs of countries and the fintech technologies that are suitable. For example, in countries where the majority of the population has access to smartphones, fintech companies can leverage mobile apps and online platforms to provide financial services. In contrast, countries where the majority of the population does not have access to smartphones or the internet may need fintech companies to focus on providing services through traditional channels, such as brick-and-mortar branches or SMS-based systems.

Moreover, cultural norms can also affect the adoption and use of fintech services. For instance, in countries where cash is king and people prefer to use physical money, fintech companies may need to focus on developing solutions that allow users to deposit and withdraw cash.

“Vulnerability isn’t about a minority,” explains Junaid Mujaver, Partner at Newton, writing in the company’s latest Vulnerability Void report. Newton surveyed over 3,000 UK consumers – including those with specific vulnerabilities such as poor vision or hearing, learning difficulties or Alzheimer’s disease – to find out how those consumers interact with financial services.

“Our research has found that the majority of people in the UK have a characteristic of vulnerability and all of us will have moments of vulnerability in our lifetime,” Mujaver says. The research shows there is a “rising tide” of vulnerability, with neurodivergent diagnoses

increasing and specific factors like the COVID-19 pandemic and cost-of-living crisis contributing to respondents’ physical and mental health.

ARE SHARED BANKING SPACES THE FUTURE?

Increasing digitisation has rendered brickand-mortar branches largely redundant, leading to mass closures, particularly in Europe. This is an issue that particularly affects rural communities. One solution has been to investigate alternative bank branch models, like shared banking hubs. In communities that are not large enough

to sustain any one bank or financial institution, multiple different operators contribute to a shared space where services are provided jointly by competing institutions.

There are now calls for more of these shared spaces to slow down the discontinuation of physical banking services. Mark Aldred, retail banking expert at Auriga, says: “The call to accelerate the roll out of shared hubs is a timely reminder of the slow pace and limited ambition of those charged with protecting access to cash and other banking services. It seems that the undue haste with which branches are removed from communities is not balanced with any obvious urgency to provide an alternative.”

However, he also admits there are problems with the current scheme: “The model adopted to date is slow to roll out and limited in scope. The sponsors and stakeholders of the shared hub initiative must explore different models like those used in other countries, such as Spain, which is seeing major investment in advisors and adapted technology to help elderly customers.

“There are proven models that could be more rapidly deployed in existing spaces to provide an even wider range of replacement services from all providers, including important face-to-face encounters for those who value them most. There is also some timidity in how these hubs work with individual bank brands providing face-to-face services on a rota.

“Banks will say face-to-face services are costly to deliver. Given rising costs, this is true, but there are imaginative alternatives like secure in-branch video and voice banking to access skilled financial advisers that can deliver personalised services while reducing operational costs.”

FINTECH LENDERS BY TOTAL FUNDING

FinTech Magazine looks at the Top 10 fintech lenders by total funding

WRITTEN BY: LOUIS THOMPSETT

With macroeconomic difficulties stretching on for many businesses and individuals, the need for fast, affordable lending options is only growing.

Leveraging AI and data, fintech lenders are fast becoming the preferred option for SME and personal loans. With supplementary tools for financial health monitoring, and extending credit to underserved populations, new-wave lenders are outstripping their legacy counterparts in all of speed, efficiency and affordability. Below, we look at the Top 10 fintech lenders by total funding.

10

138 August 2023 TOP 10

Sunbit offers buy now pay later credit for consumers, or, as it likes to call it “pay-over-time” credit. Generating US$460m since its founding, Sunbit offers its services to local providers and retailers in the Los Angeles area and has been crafted to support those facing unexpected expenses. Designed with a 90% approval rating, Sunbit says it offers fair and transparent

Prosper Marketplace

Raising US$490.5m over 17 rounds of funding, Prosper Marketplace has become a leading online lending platform, connecting prospective borrowers with individuals and institutions who provide lending services. Its website, Prosper.com, allows individuals to take out personal loans, credit, home equity, and make investments and IRAs.

America’s first peer-to-peer lending marketplace, Prosper has facilitated over US$23bn in funded loans since its establishment.

Fundbox

Fundbox is a working capital platform that offers credit and payment solutions for SMEs. Based in the tech haven Silicon Valley, Fundbox has generated US$553.5m since its founding. Leveraging AI to power its services, the fintech is able to optimise its clients’ cash flows and expense management systems, offering revolving lines of credit up to US$150,000. Founded in 2013 by Eyal Shinar, the business owner says he was inspired to start Fundbox after seeing his mother struggle with late payments at an employment agency she owned.

Digital lender for supporting and simplifying applications for mortgages, consumer loans and deposit accounts – Blend – sits in seventh on our Top 10 list with $665m in total funding. The fintech’s solutions for streamlining customer journeys is leveraged by Wells Fargo, US Bank and over 280 other financial service providers. With low-code, drag-and-drop design tools, Blend’s services allow financial institutions to easily develop new products for their customers.

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Funding Circle

$746.4m

Generating US$746.4m in total investment, Londonbased Funding Circle offers lending options for SMEs. With fast and affordable business loans, and interest-free lines of credit, Funding Circle leverages machine learning, technology, and assistance from SME market experts for pricing and issuing loans and lines of credit. After significant funding in 2013, Funding Circle expanded into the US, merging with San Franciscobased Endurance Lending Network. Typically transferring funds to SMEs in 48 hours, Funding Circle has helped over 13,000 businesses access over £14.5bn (US$18.43bn) since 2010.

GoodLeap

$800m

The innovative sustainable home upgrades provider is perhaps the most niche entry on our list. Partnering with sustainable home improvement professionals, GoodLeap offers flexible payment options to those looking to lower the carbon footprint of their homes. With one point-of-sale solution for all kinds of home upgrades, GoodLeap has streamlined the process for consumers to make their homes environmentally friendly with ease. Based out of Roseville, California, GoodLeap provides payment options for solar panels, battery storage, smart home devices and energy-efficient windows, among other sustainable home improvements.

Better.com

$905m

Affirm TOP 10

With US$905m in total funding, Better.com operates an online platform for mortgage origination. Founded in 2016 by parent company Better Holdco, Inc., the fintech has funded over US$45bn in home loans and US$25bn in cumulative coverage through its Better Cover and Better Settlement Services division. Ranked in first place on LinkedIn’s Top Startups List for 2020 and 2021, Better.com has made huge growth strides, most recently raising US$500m in 2021 with lead investment from SoftBank Vision Fund.

Avant $2.1bn

Credit first financial lender Avant sits second on our list of Top 10 fintech lenders, generating US$2.1bn in total across 13 rounds of funding. With a focus on alternative lending options and safe financial products, the Chicagobased fintech has become one of the world’s largest. Established in 2012 by entrepreneurs Albert Goldstein, John Sun and Paul Zhang, Avant was initially structured as a mid-prime lender, using its own proprietary tech in order to determine creditworthiness. The lender’s greatest growth spurt came between 2012 and 2015 when it generated over US$1bn in loans through its website – and received US$1.4bn in investment during this three-year period alone from VC firms including Tiger Global, Victory Park Capital, and August Capital. Initially operating in 16 US states, Avant’s services now extend to the UK and Canada.

SoFi

$3bn

With US$3bn in total funding across 19 rounds, SoFi is the world’s mostbacked fintech lender. Offering a range of lending and wealth management services, from student and auto loan refinancing to mortgages and credit cards, SoFi sits on top of the Silicon Valley fintech lender pile. Founded by four Stanford graduates in 2011, the lender’s inaugural loan programme was a pilot at Stanford – which saw 40 of the university’s alumni loan US$2m to 100 students, for an average of US$20,000 per pupil.

The success of the programme led to SoFi’S first bout of funding a year later, raising US$77.2m in a round led by Baseline Ventures. This funding was blown out of the water in 2013, when SoFi announced it had raised US$500m in debt and equity to expand its funding capabilities for refinancing student loans.

Most recently valued at US$4.58bn, SoFi sits top of the pile in our list of Top 10 fintech lenders.

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