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During the 1970s and 1980s, there was a famous technology programme on British television that would predict the world we’d all be living in today –sometimes to disastrous effect. Tomorrow’s World, as it was called, thought we’d all be wearing paper underwear and commuting to work on water bikes
Hopefully FinTech Magazine will be a bit closer to the mark, as we predict some of the technologies that will define the future of finance.
We have a feature on money in the metaverse, a catch-all phrase generally used to refer to any digital environment where people interact with each other using technologies like virtual reality. Will we all be walking and talking in the metaverse in 20 years’ time, and if so, does that represent an opportunity for financial institutions and fintech service providers?
Also, what does the future hold in store for NFTs? One promising use-case lies in sports merchandising, where these digital tokens could be used to unlock new revenue streams and re-engage disenfranchised sports fans.
No matter what the future holds, the present is pretty promising – as reflected in our supplement listing the Top 100 FinTech Companies. Do check that out – but maybe stick around and read this issue first!
“WILL WE ALL BE WALKING AND TALKING IN THE METAVERSE IN 20 YEARS’ TIME?”
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94 PAYMENTUS
Meet the team taming the billing & payment monsters
110 NFT
NFTs in sport: Are they the future of sports merchandising?
118 REMITTANCES
The challenges of remittances in a world that’s on the move
The colours of the Ethiopian flag adorn a street in the capital, Addis Ababa. Ethiopia wants to join the BRICS group of highgrowth economies and its foreign minister, Meles Alem, says he is optimistic about their chances. According to Goldman Sachs, Africa’s second most populous country is expected to outgrow existing BRICS members including Brazil, Russia, India and even China over the next 40-50 years. It has an ally on the continent in South Africa, part of BRICS since 2010, but there are still obstacles to Ethiopia’s admission. It faces competition from around 20 other would-be members, a researcher at the South African Institute of International Affairs told German broadcaster DW, and tensions in the region of Tigray may prove insurmountable.
Meet Dakota Smith, President and Co-founder of travel bookings app and marketplace Hopper. A familiar brand for US and Canadian-based travellers, particularly younger generations, Hopper has grown significantly from its 2007 beginnings as a data hub for improved travel experiences, offering an array of travel products and generating over US$750m in funding along the way.
Joining fellow founders Frederic Lalonde and Joost Ouwerkerk, Smith’s entry has seen the entrepreneurs grow Hopper exponentially to become one of North America’s most-used travel booking apps.
A culture of travel: The path to Hopper
Revealing he was always interested in travelling as a youth, Smith was fortunate to live in many different countries when growing up. For Smith, founding his first business, Traveler’s Digest, was his way of following a “passion in life, [his] biggest hobby”.
“Traveler’s Digest was small to start but actually grew into a fairly interesting company. We were promoting tourism in the Asia-Pacific, and a lot of our clients as we matured were major hotel chains or tourism boards. It was a really fun way to spend my early twenties, and I loved being in Hong Kong, a different culture altogether,” adds Smith.
“Founding an online travel company like Traveler’s Digest primed me really well. It gave me an early entrepreneurial experience I would otherwise not have had. I was managing a lot of different departments by myself, hiring employees, financial management, etc., so it was a super exciting experience.”
Although Traveler’s Digest ultimately didn’t work out for Smith, it was a return to his home country Canada which set him on a path to collaborating with Lalonde and Ouwerkerk, where Hopper took off.
Hopper President and Co-founder Dakota Smith discusses his path to establishing the company, how Hopper helped pioneer travel, and its plans for the future
“If Hopper can help travellers experience that bit more of the world, then that is a success”
“For the first few months working with Hopper, it was absolutely tiny,” says Smith. “Our first major hit with consumers was our price prediction on air travel. So we created an algorithm that ingested trillions of price points on data that could reliably predict the future price of flights and released that to the public. This product got some great early traction, so we decided to build the entire company around that.”
Before long, Hopper launched its app in 2015. A mobile-only company, it’s clear to see its fintech capabilities are what set it apart in the travel bookings and marketplace spaces. Selling flights from 2016, Hopper would offer customers guidance on pricing for flights, alerting customers on price booking volatilities. Although flight sales represented “a few hundred million dollars of income” for Hopper at this point, the issue Smith and the rest of the Hopper team found is that in air travel, “there’s a small margin” for profitability.
Smith adds: “This is why the largest travel companies in the world, the likes of Airbnb and Booking.com, don’t even sell air travel. They mostly focus on lodging, where the margins are typically, in order of magnitude, greater.”
“We had this challenge presented to us,” explains Smith. “We have this popular price prediction product, but it’s not really a scalable business model. How do we build a business around this product feature we made?”
First up for Hopper was – in the same vein as its industry counterparts –moving into the lodging industry in 2019. Reappropriating its prediction product,
Hopper shifted from a flight prediction operation exclusively, to a lodging prediction operation too.
“We became a hotel booking app,” adds Smith. Not happy to stop there, Hopper added car rentals in 2020 before adding vacation rentals just last year. Now, Hopper is a place “where you can book your entire trip for you, your friends, your family, whomever”.
Scaling into different industries is one thing, but Hopper leveraged its proprietary tech to further extend its capabilities as well, embedding additional financial options into its packaged trips.
As Smith explains: “We started a business unit that we call FinTech, where we started creating risk-based ancillary products that consumers could purchase, that could mitigate anxiety about price volatility or anxiety about the replacement value of their trip.”
“We created an algorithm that ingested trillions of price points on data that could reliably predict the future price of flights”
Introducing products like Price Freeze, Hopper customers can lock or hold any price on the app for up to 21 days by paying a small fee. This way, consumers can book a trip at an additional price and Hopper underwrites the risk.
Today, Hopper generates US$6bn in annual travel volume through its marketplaces. “We’ve become the third-largest seller of travel on the internet in North America,” says Smith.
Signing a partnership with Capital One in 2021, Hopper now powers travel rewards and redemptions for Capital One’s tens of millions of credit card holders in the US.
Prompting it to set up a B2B2C business model in 2021, Hopper Cloud, the company now has partnerships extending to CommBank, Agoda, Marriott and Uber. In fact, creating the Hopper Cloud is what Smith hails as his proudest achievement in his time as Co-Founder and President.
“We’ve seen really great traction on our B2B2C model, and now around 50% of our revenue is coming from these new partnerships. It’s definitely my most proud achievement, to work with the Hopper team to innovate this move. It has been great getting our travel and fintech products in front of a wider audience.”
Now an established brand in the travel fintech space, Smith and Hopper have no plans to rest on their laurels – seeking to further innovate in the travel space during an era of ever-evolving digitalisation.
In the midst of what Smith calls “deconstructing traditional travel insurance”, Hopper has pioneered modern products that mitigate specific risks for consumers.
Smith notes: “One of our latest innovations is ‘Cancel for Any Reason’. It gives you an option to voluntarily cancel
anything you buy with Hopper. We also have something called a ‘Flight Disruption Guarantee’, where if your trip is disrupted during your day of travel, you can actually rebook yourself on any other airline to your destination for free.
“These are all rules-based programmes. So instead of how things work in traditional travel insurance, where you have to file a claim – at an 80%-90% rejection rate –with Hopper’s fintech products, you can immediately cancel or rebook yourself in the Hopper app, no questions asked.”
Products designed for modern consumer convenience, Smith is positive about the popularity of these innovations with Gen-Z travellers.
“We’ve found that consumers have a lot of trust in this product, especially younger consumers like Gen Z and millennials with our products. Because it’s all rules-based, we’re accepting over 90% of claims,” says Smith.
Hopper’s Smith: The travel pioneer Smith’s involvement in growing Hopper into the multifaceted travel business operation it runs today cannot be understated. Helping Hopper to extend its reach from one piece of proprietary technology, the business is now a stalwart in the North American travel market.
Throughout his time at Hopper, Smith has never lost his love for travel. He concludes: “I’m so grateful for the benefits I got travelling all around the world. It gives you perspective. I think that’s what everyone likes about travelling. You meet different cultures, make friends, and spread your wings from the place you were born.
“It gives you a greater perspective of the world and the different things humans face in different areas. You get a clear picture of what people have in common vs what sets them apart. Ultimately, that’s what I find so interesting about travel, and if Hopper can help travellers experience that bit more of the world, then that is a success for me and a success for Hopper.”
» I always wanted to be in the tech industry and to do something that contributed to the greater good of the world, but I didn’t expect it to be in financial services – even though both my parents were accountants!
Early on in my career, I joined an IT systems provider and had a focus on financial services. The complexity of financial businesses and the systems they needed to operate drew me in, but I felt that there must be a way to simplify the technical side of financial services. I’ve now been in the industry for over 25 years and simplifying financial technology has become my passion and purpose. I founded FintechOS to make fintech innovation available to every company.
» I’ve founded and scaled several tech firms over the course of my career, and
each time it has been an incredible journey, full of complex challenges.
Founding FintechOS was my greatest challenge because I set out on the huge mission of making fintech innovation available to every company. This meant not only overcoming the challenges of building a company from scratch but also developing a new technology that would completely rethink and reinvent how financial institutions operate.
Fast forward six years and I am so proud of the team and what we have achieved. We have over 50 enterprise customers using our technology platform to bring innovative banking and insurance products to market while expanding on the capabilities of their legacy core technology. Our fintech enablement platform allows banks and insurers to rapidly launch digital products and modernise core systems simultaneously. This enables them to stay relevant and grow in what is an increasingly competitive environment, while also providing their end customers with better and more inclusive access to financial services.
» The ability to train Large Language Models (LLM) on vast amounts of unstructured data could yield the largest transformation that the financial services market has seen in decades. But Generative AI (GAI) won’t see meaningful adoption without specialisation.
Generalist GAI offerings in fintech won’t work because they don’t integrate with, and adapt to, the highly specific workflows, processes, and compliance requirements of financial institutions. The problem is that legacy core financial systems are notoriously closed off to new tools and technologies, hampering innovation. To fully take advantage of GAI innovation, embracing a new category of fintech infrastructure called fintech enablement is key. This type of platform extracts the data from legacy core systems to make it available to other systems and processes, provides a low code/no code environment that is specialised for financial products, and orchestrates APIs from existing legacy systems, combining it with GAI to deliver new solutions for employees and customers of financial institutions.
» Innovation is key to the survival of banks and insurers – from boosting revenue to retaining and growing customer bases and protecting margins. Those that figure out how to innovate at a fast pace will survive and thrive, and those that don’t risk falling behind.
This innovation includes using GAI to accelerate the creation of new financial products, and perhaps less glamorously, the automation of backoffice servicing. Innovating the back office is about modernising processes, using data to make better decisions across multiple stakeholders, and integrating ecosystem tools to reduce risk and accelerate decision-making.
When looking at GAI in practice, it is best applied in a well-defined environment that includes well-defined APIs and interface definitions. For instance, customers using the FintechOS platform can use GAI to generate Apache Camel code to accelerate their development timelines for new products. Furthermore, customers can also use our platform to speed up the integration of new tools that leverage GAI to perform better KYC, fraud detection, and risk underwriting. As a result, innovating their backoffice processes.
» Put simply, our customers are what I love most about my role and what gets me up in the morning. When I talk about our customers, I mean our direct customers – the banks, credit unions, insurance providers, retailers, and others that we support – as well as their end customers – the businesses and consumers that rely on their services to make their lives better. Whether it is opening a bank account, applying for a mortgage, insuring a business, paying for dental surgery, or buying home goods, we’re able to improve the availability of these services and contribute to their lives. I’ve been in the financial services industry for over 25 years now and simplifying financial technology for all has become my passion and purpose. I love being able to do this for our customers.
» Many leaders have impacted my way of thinking. It may be unexpected for an entrepreneur and business leader to say this, but Gandhi has been a tremendous role model for me. He had a huge impact on the world by leading by example and addressing big, transformational challenges in a totally different way than anybody before him.
Perhaps more traditionally, Bill Gates has also been a great role model, as he has created an enduring company that has stood the test of time and has been able to innovate continuously for more than three decades.
Last but not least, Maya Angelou, for her ability to inspire generations of people to be better every day and her relentless work to address inequalities in society.
“Our customers are what I love most about my role and what gets me up in the morning”
Magazine runs
10 digital banks by total funding worldwide, with over US$16bn cumulatively generated between them
WRITTEN BY: LOUIS THOMPSETT
The great challengers to the banking establishment, digital banks – or neobanks – are taking an everwidening slice of the financial industry’s pie, as they move in to outmuscle legacy institutions that have long held a vice-like grip on an economic treasury now in the midst of a technological revolution.
As more consumers shift their allegiances from traditional banking establishments to new, digital offerings, we look at the Top 10 digital banks from across the globe.
10
Current US$402.4m
New York-based Current provides mobile banking services to consumers through its partner bank, Choice Financial Group. With no physical branches, Current is one of the US’ leading digitalonly banks with US$402.4m in total funding and over four million accounts as of December 2022. Its mantra is to serve the needs of Americans who are working to create a better future for themselves. This has led its push to innovate with the best technology, delivering motivational products in a world of increasing digitisation and complexity.
09
US$710.3m
The UK’s first woman-founded bank, thanks to Anne Boden; Starling Bank has seen a meteoric rise since its founding in 2014. Offering personal current accounts, joint accounts, business accounts, and Euro accounts, Starling has remained branchless throughout its nine years of operation so far. Although Boden has stepped back from her role as CEO, which FinTech Magazine covers in this edition’s Lifetime Achievement Award article, the neobank remains a strong player in the UK market, with over three million customer accounts and US$710.3m in funding.
US$732m
A bank built exclusively for mobile, Atom Bank was the first digital-only bank founded in the UK, and the first to be granted a full UK regulatory licence. Founded by Metro Bank Co-founder Anthony Thomson and former First Direct CEO Mark Mullen, the fintech has generated £574m (US$732m) in funding since its founding. With investment from Spanish bank BBVA, Atom Bank has expanded its services to offer mortgages and savings accounts, along with secured loans for small businesses.
US$992.4m
San Francisco-based Varo Bank is a digital bank offering premium banking services wrapped in an inclusive design. Raising US$992.4m over seven rounds, Varo Bank has received investment from strategic partners including Warburg Pincus, The Rise Fund, Gallatin Point Capital, Harbourvest Partners, Progressive Insurance, Russell Westbrook Enterprises, and Lone Pine Capital. Leveraging a team of banking veterans and technology experts, Varo Bank has built a mobile app offering access to premium banking, including fast cash access, high-yield savings, and automatic savings tools products.
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Monzo
US$1.1bn
UK-based Monzo is the UK’s second-largest digital-only bank by total funding. Founded in 2015 as a mobile app and prepaid debit card, Monzo was able to offer its first full current account in 2017, when its UK banking licence restrictions were lifted. Fast-forward to 2023, and today Monzo has over 7 million customers. Monzo has sustained its growth in the UK, recently launching Monzo Flex, a buynow-pay-later product to help consumers spread costs.
N26
US$1.7bn
German neobank N26 was founded in 2013 by Valentin Stalf and Maximilian Tayenthal. Launching its first product in 2015, today N26 has over seven million customers in 25 different markets, including its native Berlin, Barcelona, Madrid, Vienna, Milan, São Paulo, and Paris. The holder of a full European banking licence, N26 leverages technology to maintain its no-branch network, with its app available on Android, iOS, and desktop. With US$1.7bn in total funding, N26 is one of the most well-funded neobanks in Europe.
04
Revolut US$1.7bn
Generating US$1.7bn in total funding, Revolut is the UK’s most well-funded digital-only neobank. Founded in 2015 by Nikolay Storonsky and Vlad Yatsenko, Revolut offers accounts for currency exchange, debit cards, virtual cars, Apple Pay, stock trading, and crypto, among other offerings. Most recently valued at US$33bn, Revolut says its aim is to build the first global financial super app. With thirty million customers using its array of financial products worldwide, Revolut processes up to two
One of the fastest-growing fintechs in the US, Chime has raised US$2.3bn in funding since its founding. Accrediting its growth to its focus on members, Chime partners with regional banks, designing customercentric financial products. The fintech says this has allowed it to better function in a more competitive market, providing lower costs options for Americans. Recently valued at over US$25.5bn, Chime’s leading investment partners include Sequoia Capital Global Equities, SoftBank Vision Fund 2, General Atlantic, and Tiger Global.
Coming in second on our list of Top 10 digital-only banks, SoFi leverages technology to provide financial products that help customers save, invest, and better protect their finances. Originally utilising an alumni-funded lending model that connected students and recent graduates with investors and alumni, SoFi shifted its approach to a non-traditional underwriting model focused on lending to responsible customers. Today, SoFi also offers cash management checking accounts and investment platforms including advisor services and brokerage options. Generating US$3bn in total funding, the fintech recently received approval from the OCC for a National Bank Charter, after merging with a Special Purpose Acquisition Company SPAC to go public at a US$9bn valuation in 2021.
Top on our list of digital banks by total funding is Nubank, with US$4.1bn generated in investments since its 2013 founding. With a mission to battle complexity and empower people to get better control of their finances, Nubank is on a path to revolutionise financial services in Latam. Operating across Brazil, Mexico, and Colombia, the fintech currently serves over seventy million customers,
leveraging technology and machine learning to innovative business practices and create new financial solutions for SMEs and individuals. Heralded for its efforts in fostering financial inclusion in what are traditionally underserved markets, Nubank was ranked as the best bank in Brazil by Forbes. A digital-only offering, Nubank’s services are tied to its mobile app, as it looks to promote financial solutions that are simple, intuitive, empowering, and human.
The Global FinTech Awards 2024 will be celebrating the very best in Fintech with the following categories:
Digital Banking Award
–PayTech Award
–
Digital Currency Award
–
FinTech Award
–InsurTech Award
–
Sustainable FinTech
–
FinTech Technology Award
–
FinTech Consultancy Award
–
Future Leader Award
–
Executive of the Year Award
–
Project of the Year Award
–
Lifetime Achievement Award
VOLT: BUILDING A GLOBAL NETWORK OF
AD FEATURE WRITTEN BY:
LOUIS THOMPSETT
PRODUCED BY:
JAMES WHITEPHOTOGRAPHER: ALBERTO ROMANO / WWW.ALBERTOROMANO.CO.UK
Nobody can achieve success in any field, let alone financial technology, without possessing a flair for innovation. This is how Tom Greenwood, Founder and CEO at Volt, was able to cultivate a career in fintech leadership which has stretched for over 20 years.
It was in 2013 when Greenwood “saw the very early signs of embedded finance” at IFX Payments, a company he co-founded in 2005. Building a product at IFX called ibanq, a banking-as-a-service (BaaS) platform, this was one of the first in the industry to flirt with embedded finance. Greenwood oversaw ibanq’s strategy and build, which today processes over US$15bn annually.
Founding IFX alongside CEO Nick Williams, Greenwood – as Chief Operating Officer – oversaw business operations and strategy, regulatory, legal and compliance; significant functions of the business.
At the time of its founding, IFX Payments actually pre-dated fintech; it functioned as a foreign exchange, hedging and treasury risk management platform. Greenwood’s product, therefore, helped shift the course of IFX’ corporate identity into a new age of fintech.
With ibanq flying high and a well-established product by 2018, although most might have been – Greenwood was not settled.
Possessing a drive to continue innovating, Greenwood had been studying the revised Payment Services Directive (PSD2) – which, back in 2018, established Open Banking as a regulatory requirement for financial institutions, marking the dawn of data sharing and payments between banks and authorised third-party providers.
“After reading about open banking in PSD2, I knew that real-time accountto-account payments could be hugely disruptive to the Visa and Mastercard duopoly,” Greenwood says.“It gave me an idea that, ultimately, I couldn’t let go of.”
In the end, following his calling for further innovation, Greenwood parted ways with
Why are we still using an alien card object, and an overseas scheme, to move money across five intermediaries?
TOM GREENWOOD FOUNDER & CEO VOLT
IFX to establish Volt, which he had already started doing preliminary planning work on, including feasibility and prospect analysis.
Now four years on from its founding in 2019, Volt has just closed US$60m in Series B funding led by Institutional Venture Partners (IVP), setting it on a path to continue its exceptional growth rate.
With this latest round of funding in the bag, Greenwood admits he is happy with the company’s progress so far, although “there is still a long way to go” in Volt’s plans for even greater growth.
is
is a technology developer and product innovator with a focus on new generation real-time payments infrastructure and open banking. He is responsible for managing strategic relationships, developing strategy and planning, and driving international expansion.
Tom
Founder & Chief Executive Officer at Volt. The company
Tom previously founded IFX Payments in 2005, a multi-billion dollar turnover fintech business operating across Europe and the Middle East.
It’s this drive for continued scaling that keeps Greenwood hungry. “I enjoy the journey, and the problem-solving, pushing the boundaries to ensure we see opportunities that others don’t,” adds Greenwood.
Although there are challenges to being a CEO, such as figuring out “where the pieces go in the jigsaw puzzle we’re building”, Greenwood enjoys the challenge that being a founder and CEO brings.
“I get restless if I’m not having an impact,” notes Greenwood. “As CEO, you have to do the blue-sky thinking and strategy building. There’s a journey element to what we’re trying to achieve. Completing these journeys is something I take great satisfaction from.”
However, for Greenwood, being CEO is more about the team than himself. “When
someone joins the company in a junior role, seeing them two years later unrecognisable from when they arrived gives me great pride.”
Admitting he won’t be at Volt his whole life, the ability of the company as a collective to nurture and grow new staff is something that gives Greenwood gratification.
Of course, being a Voltologist means “building the best products to beat the competition”, and achieving personal growth comes through overcoming challenges.
Greenwood says: “It’s about how we as an ecosystem can work together to challenge one another, to think outside the box and to problem solve, to break new ground and define our destiny through meaningful collaboration.”
Volt has been applying its workplace culture to achieve success too. “We’ve exceeded expectations in the four years we’ve been operating. We’ve attracted world-class talent from some of the largest payments companies in the world.
“We are a performance-orientated team of performance-oriented people, who live by a performance-oriented culture. But that’s never at the expense of ego. We expect openness, collaboration and humility.”
Leveraging a positive workplace culture with innovation, growth and teamwork at its core, Volt has been able to disrupt the industry with its real-time payments (RTP) offering.
From day one, we’ve believed in replicating the multi-card acquisition strategy that companies have implemented
TOM GREENWOOD FOUNDER & CEO VOLT
Real-time payments (RTP): The benefit it offers is in the name itself – sending and receiving money instantly. While the perk of speed is the first thing that springs to mind whenever someone says RTP, it’s worth noting that cost efficiencies are a big attraction in RTP adoption because it lowers the cost of payment acceptance and eliminates chargebacks.
Greenwood says: “If you were to imagine in 1955 the best and the simplest way to implement payments – before the advent of cards? RTP and account-to-account is exactly it.
“Why are we still using an alien card object, and a third party scheme, to move money across intermediaries, when an API call moves money directly from your bank account to wherever you want to send it.
“It’s the way that payments should have always been. It eliminates the cost and time of processing through intermediaries, and the costs of chargebacks and fraud, and is technologically superior in every way.
“So, not only do RTP providers offer speed, but they are more secure and cost-effective too.”
As put by Greenwood: “The technology powering Visa and Mastercard was imagined and implemented in the 1950s and 1960s. We have nothing but respect for the businesses both have built, but their technology is ripe for disruption.”
Greenwood’s claim is by no means baseless. With the US Federal Reserve recently launching FedNow, its federal, centralised RTP service for businesses, the US economy has been slated to receive a timely boost.
This is not the only RTP service on offer in the US either, with private options also available to consumers (Zelle, The Clearing House). RTP is worldwide too; Faster Payments operates in the UK, SEPA Instant is the EU standard, UPI in India and Pix for real-time payments in Brazil.
Different RTPs for different markets, these services are inherently domestic and fragmented. Where Visa and Mastercard have seen success, as Greenwood puts it, is in their ability to form “single proprietary global networks, which are centrally controlled and privately owned”.
This is where Volt comes in. “Whilst fragmentation is a challenge for RTP adoption, it’s also an opportunity. We’re positioned in the RTP space to do what Visa and Mastercard did for debit and credit cards.”
Aiming to build a global network for RTP everywhere, Volt hopes to bring each domestic RTP offering into a global network. Each RTP provider “fundamentally has the same expertise and each does the same thing”, adds Greenwood.
However, building a global network of RTP providers is somewhat different from the
accomplishments of Visa and Mastercard, in fact – as a by-product of open banking – RTP offerings bypass everything these behemoth card providers offer.
Greenwood notes: “RTP is a next-gen payments system based on API calls to account-based payment instruments. These allow you to initiate a payment, circumventing card schemes in real time from one bank account directly to another.
“Because open APIs and account-based payment instruments weren’t possible before, card networks have acted as a layer scheme that built interoperability between bank accounts.
“But there are typically four or five intermediaries between those bank accounts. Your data and money flow through each of them. That’s why it takes days for your money to arrive when paying by card.”
Using the example of Pix in Brazil, Greenwood remarks that a “28-day card settlement became two seconds, costs
were reduced by 80% and chargebacks were eliminated” when consumers shifted to RTP to complete transfers.
It’s no wonder Greenwood calls RTP an architectural revolution in the world of payments. And for Volt, the mission is to continue “building an orchestration layer, connecting RTP to a single point of access, to a single protocol, making each RTP network interoperable and accessible globally”.
Volt is already some way to achieving this aim, integrating with aforementioned Faster Payments in the UK, SEPA in the EU and Pix in Brazil.
With Series B funding now secured, Volt is on track to expand its ‘network of networks’ by integrating with the newly-launched FedNow in the US, NPP in Australia and UPI in India.
We are a performanceorientated team of performanceoriented people who live by a performanceoriented culture
TOM GREENWOOD FOUNDER & CEO VOLT
“We’re building the future of payments,” remarks Greenwood, “Our global RTP network, the world’s first, leverages domestic RTP implementations and harmonises them to the same point of access with a single infrastructure accessible to all.”
Still in the process of building a global network of RTP providers, Volt hopes to offer a full suite of services enabling payment teams to solve practical business problems, managing payments effectively and efficiently across the value chain.
As Greenwood puts it: “Building an RTP network and cross-border services is one revenue stream, but cash management,
payouts and disbursements are others. Additional value-add products allow us to build a diversified revenue strategy, by geography and by product.”
Evidently, Volt is not the only player looking to build a global RTP network. Regardless, Greenwood feels his company’s unique product strategy, centred around orchestration, will be key to Volt as it aims to take a significant market share.
“In Europe, we partner with several connectivity partners, which allows us to benchmark performance and optimise conversion for payment success,” says Greenwood. “From day one, we’ve believed
in replicating the multi-card acquisition strategy that companies have implemented for many years.
“Payments is increasingly a performanceoriented business. Saving a merchant 2% on conversion performance makes a huge difference to their bottom line. We’ve always had an approach to orchestration, which card companies have been doing for many years.
“We took the best learnings from the cards environment and thought carefully about not reinventing the wheel. How do we replicate and build on these 30 to 40 years of learnings in RTP?
“Doing so not only allows us to build a performance-oriented platform that delivers the best conversion and payment success outcomes for merchants; it also gives us security and redundancy in everything we do.”
The advent of RTP payments, expedited as a result of open banking legislation, has given Volt a platform to deliver a network of globally integrated RTP providers. It is
not the only beneficiary of open banking, as more ecosystems emerge across the sector in partnerships between banks, fintechs and insurers.
In an age of network creation and ecosystems in financial services, Greenwood says it’s important to treasure the synergies of working in partnership while understanding you’re “in a competition on certain fronts”.
He adds: “What’s important for us is platformisation and problem-solving. You’re not going to solve all of the problems yourself. Any business needs to identify its area of expertise, ensure it’s doing that well, and leverage great partnerships.
“This is key to building a global platform that solves problems. A business owner must always ask: What is the pain point we’re addressing? Who are we helping? Why is this important? These are the key ingredients to building a successful business.”
For Volt, the problem it’s solving is clear, as it continues its mission of building a global network of RTP providers.
We’re building the future of payments, and we’re building the world’s first global RTP network
TOM GREENWOOD FOUNDER & CEO VOLT
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After the collapse of several banks earlier in 2023, FinTech Magazine looks at how banks can react to reinforce stability amid strong economic headwinds
WRITTEN BY: LOUIS THOMPSETT
If there’s one word to describe the economic outlook of the global banking landscape, it’s unstable. This year has already seen the sudden collapse of the seemingly safe banking institution Silicon Valley Bank (SVB), which fell apart in a remarkable 48 hours after struggling with a ‘hole’ in its finances. Collapses haven’t been endemic to just North America either – Switzerland’s second-largest bank, Credit Suisse, collapsed in March 2023 before being purchased by its rival UBS in a US$3.3bn deal.
Sparking fears of a pandemic of instability in global banking and a string of further collapses, German Chancellor Olaf Scholz was prompted (or forced) to allay fears over a major banking collapse in an address to the European Parliament, saying banking –in the EU at least – “remains stable”.
Notwithstanding attempts to reassure markets, trust in the stability of global banking institutions remains tentative. Uncertainty itself poses problems too, particularly for bank lending rates. Throw in economic headwinds and fears of a potential recession, and it’s clear that banks need to adjust risk governance to deal with these external factors.
While some, like Scholz, have been key to play down the impact of bank closures this year, Dow Jones Head of Risk & Compliance, Joel Lange, believes the collapse of SVB “rocked the banking world, sending regulators racing to stabilise the global financial system on both sides of the Atlantic.”
He adds: “This was a major failure of corporate governance. Reports following SVB’s collapse indicated that the bank operated without a full-time chief risk officer for more than a year and that the board risk
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committee met frequently in the lead-up to the collapse, suggesting they knew they were treading along a dangerous path for quite some time.”
While a failure of corporate governance may suggest recent bank collapses are isolated incidents, Professor at King’s Business School and Director of the Qatar Centre for Global Banking & Finance, David Aikman, feels SVB’s collapse is a significant “warning sign for the future”.
He notes: “The problems that led to the downfall of SVB bank in the United States and similar institutions persist. Despite their large size, these US banks were not subject
to the stress testing rules and the strictest capital and liquidity requirements, and they consequently remain vulnerable to the impact of higher interest rates.”
While this may suggest banking issues are “more regional (US) rather than global”, as claimed by Synpulse’s Managing Director Marouane Bakhtar, Aikman notes that Europe is facing highly stretched housing markets, in addition to risks in the commercial real estate sector.
“Many European banks operate with wafer-thin capital ratios supporting their housing market exposures, so the degree of resilience to these losses is not that great,”
• Identifying and assessing the potential impact on partners, customers and suppliers who may be impacted by periods of volatility
• Gathering reliable and actionable intelligence and conducting regular risk assessments to stay informed and prepared
• Continuously monitoring breaking business news and developments in regulatory policy – minimising tail risks where possible through proactive risk mitigation
• Fostering a culture of transparency by establishing communication structures across departments to effectively inform and engage key stakeholders
explains Aikman. “These issues build on pre-existing vulnerabilities in the EU banking system, and its ties with sovereign debt positions, that have not fully been addressed.”
It is clear uncertainty in the global banking landscape is widespread, and with that comes knock-on effects.
SunTec President Amit Dua notes: “The lending standards in US banks have been tightened and this trend is anticipated to
persist throughout the year”; a result of an anticipated decrease in the credit quality of loan portfolios and collateral values of customers, reduced risk tolerance, concerns regarding bank funding costs, liquidity positions, and deposit outflows. The picture may not necessarily be the same in all markets though, as according to Bakhtar, “the situation seen in the US looks different in the UK. Indeed, as of May 2023, net mortgage lending was expected to grow 1.25%, rising by £29bn, showcasing the UK’s ability to dodge recession.
“THE PROBLEMS THAT LED TO THE DOWNFALL OF SVB IN THE UNITED STATES AND SIMILAR INSTITUTIONS PERSIST”
DAVID AIKMAN
PROFESSOR AT KING’S BUSINESS SCHOOL AND DIRECTOR OF THE QATAR CENTRE FOR GLOBAL BANKING & FINANCE
“The situation is quite similar in Asia, predictions expecting impacts on loan to be moderate, mainly driven by a sharp rebound in activities in China, as the region has not been affected by global banking stresses.”
So, while the impact of global banking uncertainty may differ in extremity from market to market, for Aikman, the clear factor driving falling loan rates is uncertainty itself, “which is really a euphemism for a more pessimistic outlook for the economy”.
While the impact of economic uncertainty on lending rates is clear, SunTec’s Dua feels it’s how banks act now that can determine future confidence in the market.
He says: “Banks must now re-think their deposit strategies and innovate to deliver enduring customer value. The bank of the future requires breaking free from transactional relationships and becoming trusted advisors to customers.”
For Dow Jones’ Lange, risk management is “critical” for bringing back trust in global banking markets, and says banks should sharpen their corporate governance practices.
He adds: “Reliable and robust risk data has always been imperative, but the current economic landscape is putting compliance in the spotlight like never before. In light of this, it is imperative that banking stakeholders are basing their decisions on timely, trustworthy sources.”
Meanwhile, Aikman feels banks can improve risk management by “bolstering their capital and liquidity positions, providing them with greater resilience to absorb any future shocks.”
This is further echoed by Bakhtar, who suggests banks “action a number of levers to
ensure they stay safe in a tougher economic environment”. For Bakhtar, this consists of three things in addition to robust risk management frameworks. “The first is they need to have sufficient capital buffers to weather any downturns (doing this either by raising capital through equity or debt issuances, or else by retaining earnings).
“Secondly, they need to reduce their risk exposure by diversifying their portfolios and reducing their over-reliance on a sector or region. Third, I believe it is crucial for them to look at operational efficiency, and streamline legacy systems, processes, and organisations to reduce costs.”
It is clear that limiting any wavering instability is achievable for financial institutions, should best practices be maintained. And while economic headwinds may be making life
“RELIABLE AND ROBUST RISK DATA HAS ALWAYS BEEN IMPERATIVE, BUT THE CURRENT ECONOMIC LANDSCAPE IS PUTTING COMPLIANCE IN THE SPOTLIGHT LIKE NEVER BEFORE”
JOEL LANGE HEAD OF RISK & COMPLIANCE, DOW JONES
“The key risk factor influencing the outlook for the economy and for financial stability is the outlook for monetary policy. The rise in rates has played a significant role in the difficulties we are currently facing. An important question is whether central banks possess sufficient tools to bring inflation back to target while also ensuring financial stability.
“If there is a concern that rates need to be further increased to reduce inflation, will this lead to additional problems in the banking system? In such a scenario, are there alternative measures that can be employed to mitigate the strains on banks, such as providing liquidity to the banking system? What are the limits to such actions?
“There is an ongoing and lively debate regarding the extent to which we can rely on these types of tools or if, when push comes to shove, central banks will be forced into making an uncomfortable trade-off between achieving price stability and financial stability.”
Below, Synpulse’s Marouane Bakhtar details the changes banks should make to move away from a passive compliance-driven approach to a proactive risk management culture.
The biases banks need to move away from:
• Having inadequate risk models: Banks use risk models to predict potential losses and manage risk exposure, however, these models are based on historical data and may not accurately capture the full range of possible outcomes. This leads to a massive gap between the risks banks think they are taking vs actual risks they are actually exposed to
• Being short-term focused: Banks tend to focus too much on short-term risks, and not enough on long-term risks
• Being passively compliance driven, as opposed to pro-actively risk management focused: there is a big gap between following a set of rules defined by regulators vs. effective risk management (actively identifying and mitigating risks)
• Suffering from cultural issues: there is a gap between the risk culture banks aspire to have vs. the risk culture they actually have
• Lack of agility: Banks need to be agile, especially in an economically uncertain environment. They should be able to adapt to changing circumstances. What usually happens is that Banks rely on bureaucratic structures and slow decision-making processes
more difficult for banking institutions now, many – including Convera CEO Patrick Gauthier – believe “global markets will be bullish” onwards from 2024.
So, is the future of economic uncertainty in banking temporary, or will it be a longlasting issue?
As far as Dua is concerned, “the bank consolidation trend is likely to continue given the financial pressure and other factors at play.” While for Lange, “there will continue to be winners and losers based on the risks taken by banks”. He believes “it is important for both consumers and regulators to ensure they understand these risks through diligence and oversight.”
So, while it is difficult to make any prediction, Synpulse’s Bakhtar believes “there should be minimum standards and practices that banks should apply to how they run businesses, so they can move from being a passive compliance-driven approach to a proactive risk management culture.”
“BANKS MUST NOW RE-THINK THEIR DEPOSIT STRATEGIES AND INNOVATE TO DELIVER ENDURING CUSTOMER VALUE”
AMIT DUA PRESIDENT, SUNTEC
WRITTEN BY: LOUIS THOMPSETT
PRODUCED BY: JAKE MEGEARY
In his new role, Nistala leads a team of around 2,000 people globally to drive the technology agenda for payments businesses, covering debit and credit card payments, as well as bill and digital payments.
Serving nearly 10,000 financial institutions and six million merchants globally, Nistala joins the company at an exciting time.
Financial services: A career-long dedication “If you look at the financial sector and the impact it has on people; for me, this makes it the most important and influential sector,” says Nistala.
He adds: “Knowing that the solutions we provide impact consumers’ ability to transact and go on with their day-to-day life without worrying about the complexity of underlying processing is a big responsibility. For me, it’s the ability to provide a service that makes financial services the best sector to be working in.”
“Consumers feel they are limited by time and they want to be able to do things quickly and seamlessly”
In Fiserv, Nistala has found an organisation that reciprocates the values he holds for prioritising customer satisfaction, quality service and innovation.
It is the alignment of these values that has given Nistala the platform to thrive at Fiserv. In his 15 months at the company, Nistala has streamlined operations between Fiserv’s thousands of global associates in different time zones, as well as improved the stability and the control environment at the fintech.
“These things are very critical to get right for a financial services company,” says Nistala. “A large number of clients look at us for the quality of our products and the stability and security we provide.
TITLE: CHIEF INFORMATION
COMPANY: FISERV
LOCATION: UNITED STATES
Umasankar Nistala serves as Chief Information Officer overseeing the Payments businesses at Fiserv, focusing on solutions offered by thousands of businesses and financial institutions to enable millions of consumers to receive and pay bills and make purchases at the point of sale. In this role, he partners closely with business leaders to drive the company’s payments technology solutions including Card Services, Digital Payments and Biller Solutions. Nistala has played a key role in modernising payment platforms and innovating new solutions to enable consumers to move money, and he has a passion for coaching and
Georgie may only have been Senior Director of Client Success at Relevantz for a few months, but he has already started to make a significant impact.
“I’ve been able to bring skills from my previous experiences, some good practices that I hope to pass along to the team here while building stronger relationships with our customers,” explains Georgie.
Relevantz & Fiserv: Nurturing partnerships
Customers don’t come much bigger than Fiserv, which represents one of Relevantz’s
biggest clients since its inception as a product services company. While product engineering is still “in the DNA of what Relevantz does”, the company has since evolved into an end-to-end service provider.
Georgie adds: “We want to give partners the power to not just help their customers, but also to become trusted advisors for their customers.” For Georgie, this value is why a partnership with the likes of Fiserv is of significant importance.
Senior Director of Client Success at Relevantz, Georgie John, traces his time at the service provider and the importance of its partnership with Fiserv.Relevantz: Partnerships in the modern age
Amid a digital revolution, maintaining partnerships in financial industries is more important now than ever, as fintechs look to ‘out-innovate’ one another to provide the most frictionless products for clients.
As far as Georgie is concerned, Relevantz can “build something new tomorrow, but six months to a year down the line, that product is already ready to be refreshed again”.
He continues: “This is part of what we do, identifying areas that can be modernized and refreshed because today modernization is a continuous process. This is why our partnership with Fiserv is so important today.”
What’s more, windows of time for modernization are only getting smaller and smaller with the introduction of AI in financial services. Georgie feels “AI is going to be a key force of driving future growth in banking payments and transaction processing,” which Relevantz will help facilitate for financial companies alongside Fiserv.
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The progress we have made in this field is what I’m most proud of at Fiserv in my 15 months here.”
A shifting landscape: Financial services through the Fiserv lens Nistala’s input alone is just one aspect of growth at Fiserv, which must keep adapting to an ever-shifting landscape.
As Nistala puts it: “In the last 15 months, I’ve seen the company make positive strides to improve service levels, make our systems and platforms more stable while continuing to innovate for our clients.”
One of the ways Fiserv has kept this level of innovation up is by continuing to streamline its real-time payments (RTP) offering, something Nistala feels is a significant topic in financial services right now.
“If you look at the market, it continues to tell us that the demand for faster digital payments is only increasing day by day. RTP is an area in critical need of further development, and the question of moving money faster is something brought up by our clients every day in a variety of different use cases.
“Three in four consumers say it is important to be able to receive payments and have access to funds instantly. And if you look at certain demographics, there are a lot of consumers who are dependent on money coming into their account just so they can live their life, and buy the goods and services they need. So continuing to move money quickly, and innovating so it can move at ever-increasing speed is of critical importance.”
With technology evolving at a quickening pace, Fiserv is keen to remain at the forefront of innovation, with market-leading applications such as its NOW Network.
In addition, with the upcoming release of the US Federal Reserve’s FedNow service, Fiserv hopes to tap into innovation to boost its RTP offering for clients.
Utilising FedNow will be important for Fiserv to stay at the forefront of technological capabilities in the financial services industry; Nistala explains: “With FedNow, businesses and individuals will be able to send and receive instant payment at any point in time during the day, and recipients will have full access to funds immediately.”
To better gauge the scale and extent of services Fiserv offers, one must simply remember that leveraging FedNow
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to boost its RTP offering is just one facet of the broader payments service that it offers.
In fact, the fintech’s own proprietary solution, Payment 360°, means just that – streamlining all payment options into one product for Fiserv’s partners to leverage and scale how they wish to.
Nistala notes: “Financial services is no longer one size fits all. It is about how you make sure you cover the full gamut of services at one location.
Payment 360° is our vision of how to bring these products together into a more seamless and compelling experience for our financial institutions and consumers. Our solutions are better together now.
“So, Payment 360° will enable financial institutions to offer a different payment experience that streamlines and simplifies payment interactions and delivers a heightened level of ease and convenience for our end users.”
It is this focus on an all-in-one payments offering that Fiserv feels differentiates itself from the competition, as it strives to be a holistic partner. Nistala focuses on two key assets partnering with Fiserv offers to its partners – “time and simplicity”.
“Financial services is no longer one size fits all. It is about how you make sure you cover the full gamut of services in one experience”
He adds: “Consumers feel they are limited by time and they want to be able to do things quickly and seamlessly. An integrated payments offering will provide that, especially when there are so many services available.”
Improving time and increasing simplicity through Payment 360° is not the only means through which greater customer satisfaction can be attained through a Fiserv partnership – the fintech’s SpendTrack service offers a credit card and expense management platform for a variety of use cases.
In particular, Nistala feels SpendTrack is important for SMBs, as they look to keep a close track of their expenditures through tough economic times.
“Serving SMBs is at the heart of what Fiserv’s SpendTrack service offers. Providing them with solutions so they can easily work and track their expenditure could be key to survival in these economic times.
“The service allows SMBs to optimise business operations, streamlining information delivery so businesses know where and what they need to fund. As a self-service product, this allows SMBs to reduce the overhead they couldn’t otherwise afford.”
Always striving to stay on top of the latest innovations in payments, Fiserv will soon be releasing an SMB payment solution, targeted at financial institutions, which can integrate the service to offer third-party support to SMBs.
“This new solution will go beyond basic bill payments. It is an integrated SMB solution that will enable all local businesses to compete with best-in-class payments capabilities, and manage all invoices, bills and payments in one place.”
Launching a new product such as this keeps Fiserv ahead of the competition in an evolving landscape of financial services. But this wouldn’t be possible without the extensive payment ecosystem the fintech has fostered to pinpoint the latest innovations on the market.
“Payment ecosystems are very effective because there is a lot to be done to identify solutions and opportunities,” Nistala adds. “Therefore, being part of an ecosystem eases the burden of this, and now we can be excited about the opportunities coming our way that we have been able to leverage through our ecosystem of partners.”
One such partner is Relevantz, which innovates together with Fiserv to achieve “new levels of excellence for clients, and inspiring excellence” in Fiserv’s innovations.
Ever keen to grow the network, Fiserv has recently moved from the Nasdaq Stock Market to the New York Stock Exchange (NYSE) and has plans to publish the first small business index, a monthly snapshot of consumer spending.
This latest partnership will help its clients get insights “into what is happening in different types of SMBs across the US”, says Nistala.
Nurturing these partnerships is of vital importance to Fiserv. “Nobody can operate in a vacuum, deliver and be successful”, notes Nistala, with “partnerships and collaboration is key” to the success of the company. Over the next five to 10 years, Nistala believes it is “convenience, connectivity and security” that will be the driving force of innovation.
“The pace of change that is happening is very fast, and this rate of change is accelerating expectations for a frictionless
payments experience for every single consumer. There will be greater connectivity between platforms and services in the future to make this happen.
“Throw in AI, and all of these combined innovations will accelerate at a pace to drive convenience for consumers, businesses and financial institutions. Even over the next two years, innovation will really push for connection, this is why partner ecosystems are so important.
“This is why at Fiserv, we must continue to stay committed to being at the forefront of these advancements, listen to our clients, understand their needs, and see how we can get new solutions to the market for them.”
One such solution Fiserv launched earlier this year is AuthHub, an intelligent data engine that connects Fiserv-managed consumer financial channels and touchpoints.
Combined intelligence gathered from debit and credit card transactions, online and mobile banking activity, ACH transactions, ATM interactions, Zelle transactions, bill pay activity, wires activity, card tokenisation, rewards programmes and contact center interactions creates an in-depth profile of an individual’s financial services behaviours and patterns to better identify fraudulent activity before it occurs.
“Serving American SMBs is at the heart of what Fiserv’s SpendTrack service offers”
UMASANKAR NISTALA CIO, PAYMENTS FISERV
Although anticipatory talk around an impending metaverse revolution may have quietened so far in 2023, with Meta’s Metaverse Chief Vishal Shah admitting “the hype is dead”, this by no means suggests the future won’t be metaverse-dominated, despite the fact AI has come to rule the technology discussion surrounding Web3.
Franklin Templeton’s Rafaelle Lennox believes the metaverse market could be worth US$5bn by 2030. She says to Forbes: “It’s too big to be ignored. In the first half of 2022, over US$120bn has been invested in the metaverse, double that of 2021, from startups to large tech companies, venture capital and private equity.”
Talk of an expanding metaverse has come hand in hand with discussions of a bigger role for cryptocurrencies – which have been touted as a primary means of digital payment in the metaverse.
But cryptocurrencies have seen a growing competitor emerge in recent months, with many centralised banking institutions experimenting with the introduction of Central Bank Digital Currencies (CBDCs).
While metaverse talk may have quietened, that doesn’t mean it won’t come to dominate our digital lives. So, what will payments in the metaverse look like?
“MAINTAINING USER TRUST THROUGH PROTECTING PRIVACY WILL BE INTEGRAL TO THE REPUTATIONS OF BUSINESSES IN THE METAVERSE”
ZACK MICHAELSON SENIOR DIRECTOR, FINANCIAL SERVICES, PUBLICIS SAPIENT
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Could CBDCs rival crypto as a primary means of metaverse payment in the future?
How much purchasing power will crypto have in the metaverse?
Crypto’s metaverse purchasing power
For Monavate’s CTO, Mat Peck, “sryptocurrencies will absolutely be the preferred method of payment as the metaverse grows.
“In a completely virtual environment where all goods provided are nonphysical and the transfer of ownership is instantaneous, everything you might want to buy is technically a non-fungible token.”
Paysafe’s SVP of Wallet as a Service & Crypto/Web3, Elbruz Yilmaz, expands on this, noting compatibility between crypto’s decentralised nature and the metaverse’s principles of user autonomy and ownership.
“Programmable features of certain cryptocurrencies enable the creation of smart contracts and decentralised applications within the metaverse,” he explains. “For example, users can buy and sell digital assets such as virtual real estate or rare virtual items using cryptocurrencies such as Ethereum or users can hire virtual services from freelancers to design custom avatars or digital artwork.
“Cryptocurrencies can also act as a unified currency for cross-platform transactions, enhancing interoperability.”
Despite the perks of cryptocurrency as a viable option for completing digital payments in the metaverse, Publicis Sapient’s Senior Director of Financial Services, Zack Michaelson, is not so convinced.
While admitting the use of crypto could grow in parallel to the metaverse, “a cumbersome process of setting up a crypto wallet, lack of comfort and ease around custody, negative headlines in the crypto world, and the volatility of the coins themselves all contribute to making cryptocurrencies a less-thanideal choice for the average user.”
He adds: “With regulatory uncertainty clouding the picture and environmental concerns on many people’s minds, I wouldn’t bet my last bitcoin on cryptos ruling the metaverse. For those who aren’t crypto enthusiasts, to begin with, the ease, familiarity, and stability of paying with money (“fiat” as crypto enthusiasts would say), rather than cryptocurrencies, will be more appealing.
“IN OPEN METAVERSE ENVIRONMENTS ... IT CAN BE CHALLENGING TO VERIFY THE IDENTITY OF THE PEOPLE YOU INTERACT WITH”
MARK HUGHES SVP OF SECURITY DXC TECHNOLOGY
“If consumer interest in metaverse transactions continues to increase, banks and other financial institutions will rise to the occasion, offering easy and secure payment solutions, translating real-world trust into the virtual realm.”
With the metaverse’s economic system set to be totally digital, Armalytix’s Executive Chairman of UK Source Funds and AML Checks, Mike Ward, looks at the challenges traditional banks face in accessing the space.
“A critical issue that financial institutions encounter is related to KYC (Know Your Client) and AML (Anti-Money Laundering) regulations. Whether the payment is made with fiat currency or metaverse money, regulated financial institutions will need to conduct KYC checks on their clients.
“Alternatively, they may need to establish partnerships with other regulated financial institutions that can perform these checks on their behalf before processing the payment.
Are
It is, perhaps, that banks and central financial institutions are already rising to the occasion, experimenting with CBDCs as a more trusted form of digital payment to rival cryptocurrencies.
Transact365 CCO Scott Major says that while “the metaverse is driving CBDC development to some extent… the preferred payment method remains uncertain due to regulations and conflicting views on central banks and decentralised tokens.”
“Furthermore, metaverse money operates beyond national borders, posing additional challenges. Regulated financial institutions are not authorised to receive or make payments to individuals or entities in certain countries.
“They may be restricted to acting solely within their own country of domicile. Determining the country of origin within the metaverse poses a significant hurdle. Violations of these rules could result in severe punishments from regulators, and in some cases, even criminal penalties.”
This is echoed by Yilmaz, who says the success of CBDCs in the metaverse depends on both their technological design and integration with virtual platforms, while interoperability is also important across different metaverse platforms for CBDC adoption.
It could be that CBDCs don’t end up as a payment option in the metaverse at all, with Michaelson sceptical about central banks’ interest in retail CBDC offerings, saying “evidence of serious discussions on retail CBDCs is limited.”
He expands: “Large central banks like the US Federal Reserve and European Central Bank (ECB) have not yet decided whether a CBDC would be necessary or valuable and speak primarily about wholesale use cases as the ones they would consider anyway. Central banks are currently only involved in wholesale settlements between financial institutions.
“Whether there is a need to provide these settlements on blockchains (which is what we mean by “CBDC”) is a reasonable question, especially if on-chain transactions continue to grow at large financial institutions.
“That, however, has nothing to do with reinventing the entire purpose and operating model of central banks to become consumer-facing financial institutions. I think it would take a lot more than some trending metaverse worlds to make that happen.”
So, while the scope of CBDCs in the future remains murky, Yilmaz disagrees with Michaelson’s assessment, believing ‘ CBDCs may play a greater role as a payment method in the metaverse”, in combination with “cryptocurrencies and stablecoins, depending on their respective strengths and market dynamics.’
With preferred methods of payment in the metaverse unclear, there is arguably a greater unknown – the future risks associated with completing metaverse transactions, and the security of digital accounts in the space.
For Yilmaz, the risks extend to all of “security vulnerabilities, the lack of regulation, scalability challenges, privacy concerns, fraud and scams, cross-platform interoperability, cryptocurrency volatility, accessibility and inclusivity, the absence of centralised authority, and the need for user education.”
An extensive list with an extensive amount of issues to resolve, DXC Technology’s SVP of Security, Mark Hughes, adds to them. For him, payment security in the metaverse is a question of veracity, “especially in open metaverse environments where it can be challenging to verify the identity of the people you interact with.”
He adds: “How do you know that the person you think you are talking to in the metaverse is who they say they are when their “identity” is that of a digital avatar that may or may not resemble their physical being? Such verification is crucial when it comes to exchanging confidential information or making payments.”
With regulations and identity processes yet to be fleshed out, Michaelson feels the prospect of a metaverse will be just as thrilling for cyber criminals as it will for users. “Scams and theft are real concerns, especially given the current state of security practices, which are yet to mature,” Michaelson explains.
“Balancing innovation while ensuring security will be an ongoing juggling act. Add to this the serious matter of data privacy. With the metaverse churning out vast
amounts of detailed user data, it’s a dance on a tightrope of ethics and privacy.
“Maintaining user trust through protecting privacy will be integral to the reputations of businesses in the metaverse, especially given the focus of many in that world on anonymity.”
How big can the metaverse’s virtual economic system become? With the issues of implementing payment infrastructures in the metaverse laid bare, it poses a question of how big virtual economic systems can become.
Michaelson notes that while “there’s considerable momentum building, with tech titans like Meta, Microsoft, and NVIDIA laying down heavy bets on the metaverse”,
he cautions that digital industries “should not get carried away before considering the challenges that will have to be solved”.
“First, not everyone is so universally excited about the concept. A recent poll by Axios found more people were ‘scared’ than ‘excited’ about the metaverse, with 60% admitting they hadn’t heard much about it. That doesn’t exactly scream ‘widespread adoption’, does it?
“There are technical hurdles to clear, too. Developing a standard payment infrastructure, ensuring regulatory compliance, and bolstering security measures are just some of the challenges on the horizon. Throw in the data privacy concerns and the potential misuse of user information, and the picture becomes murkier on large-scale adoption quickly.”
While Transact365’s Major agrees that the virtual economic system is uncertain, “the introduction of mainstream virtual reality (VR) platforms like Apple Vision Pro could cause it to expand significantly.”
Monavate’s Peck agrees, should innovation and architecture ramp up, “the economic system within the metaverse could enable a mainstream way that people make payments.”
He concludes: “The potential is enormous and global, but the metaverse isn’t what people currently think it is. For the metaverse to become what it needs to be, people need to be able to exchange something of value – so until that properly exists, it won’t be utilised in the correct way.”
“THE POTENTIAL IS ENORMOUS AND GLOBAL, BUT THE METAVERSE ISN’T WHAT PEOPLE CURRENTLY THINK IT IS” MAT PECK CTO, MONAVATE
WRITTEN BY: TOM SWALLOW
One of the key functions that businesses must be able to execute in the digital era is payments. What seems like such a simple transaction on the internet today increases in complexity when taking into account the measures that are put in place to manage and move large sums of money, ensure security of transactions, and create a much simpler user experience than that of cold hard cash.
Digital payment solutions have become integrated into the lives of businesses and consumers, with millions of applications used globally. However, this isn’t to say that each payment system is operating to its maximum potential – each business is different and has a unique mix of problems to be acknowledged and addressed.
The first step for organisations looking to optimise their billing and payments capability is perhaps the most difficult: understanding and quantifying the problems they have, the impacts these issues have on the business, and the potential growth they are missing as a result of these inefficiencies.
This is where Paymentus has created a rather unique method of breaking down barriers for companies to allow them to understand the many layers of complicated processes and identify the challenges hiding within them in developing a family of billing and payment Monsters. By characterising the problems that its customers face, from the adoption stage to continued digital
Nicole Haskins and Chris Trainor from Paymentus reveal ‘Monsters’: the lurking issues hidden within payment and billing processes
optimisation, Paymentus shines a light on the hidden pitfalls within billing and payment processes. That awareness leads to action, resolution, and ultimately, better solutions that future proof digital strategies.
A core tenet of Paymentus’ monstertaming capabilities is its ability to deliver a holistic bill presentment and payment experience. The majority of payment solution providers on the market deliver disparate components of a billing and payment system. Paymentus separates itself by bringing these varied components together in a holistic solution, built from the ground up, that can be leveraged to tame and contain the monsters in its clients’ businesses.
“Many providers and solutions in the market have similar core features like web, IVR, and digital wallets. But it is how it is built that matters and truly can either be a solution or be a burden. When you install
a system, implement it, and begin taking millions of dollars in payments, you very quickly see what’s under the hood that maybe you did not dig out of enough during the sales process, and it truly matters,” says
Nicole Haskins, Vice President of Sales & Marketing (and Monster Taming Expert) at Paymentus.
CHRIS TRAINOR PRODUCT, MARKETING, PARTNERSHIPS AND GROWTH EXECUTIVE, PAYMENTUS
“ We provide our clients, regardless of the payment method, with a single deposit and then we give them visibility to reconcile down to the penny”
TITLE: VP OF SALES AND MARKETING
COMPANY: PAYMENTUS
LOCATION: UNITED STATES
Nicole Haskins is Vice President of Sales and Marketing at Paymentus. For more than 20 years, Nicole has been committed to connecting great solutions and providers with utilities and local government agencies to improve their electronic payment initiatives. Dedicated in advancing service and automation with technology, Nicole has worked with hundreds of the top cities, counties and utilities to implement successful streamlined revenue collection processes and payment solutions that evolve and transform these critical processes to maximize adoption, security and customer engagement.
TITLE: PRODUCT, MARKETING, PARTNERSHIPS AND GROWTH EXECUTIVE
COMPANY: PAYMENTUS
LOCATION: UNITED STATES
Chris Trainor is responsible for platform strategy, innovation and partnerships at Paymentus. He has more than 20 years of banking and payment technology experience, helping clients and partners modernize their payment ecosystems. Prior to joining Paymentus, Chris was a Senior Vice President at Bank of America.
“You see a lot of layers, siloes, disparate solutions, and a lot of duct taping together different pieces. So, we needed a way to expose these underlying issues to billers, whether that be insurance companies or utility providers, online banking and financial firms, and say, ‘you need to understand that these problems don’t go away on their own and implementing a solution that solves the underlying issues and provides you with the user solutions you crave is critical,’” explains Haskins.
Cue the Monsters – the marketing strategy that allows Paymentus to get to the heart of business concerns, and understand the needs of its clients to simplify conversations for all levels in an organisation so they can truly resolve what is plaguing them today.
By outlining each monster’s characteristics, clients are able to look objectively at their processes and determine whether their problems fit one of the Paymentus personas
– all without the scariness that such heavy conversations may imply.
In addition, the many titles and skill sets that go into solution searches and ultimately decision makers range from finance to customer service, to of course IT. However, oftentimes understanding and uncovering the “why” organisations need to solve for this or that is as critical as the vendor they choose. Sharing and identifying the problems along with educating the many hidden pitfalls truly brings together all the needs
of an organisation so they can focus on the problems they need to solve and pick the right solution for them.
This could be in the early stages whereby a client is still operating with a legacy system and is yet to transform to a digital process, something more niche like understanding there is a lack of cohesion and communication between systems that they have in place, or a more real-time challenge like cybersecurity that impacts the most sensitive areas of the business.
While the idea has grown to now include nine monsters, Paymentus initially recognised six different pain points that are common across the majority of its customers and the actions needed to tame them and create long-term improvements:
• Clunky payment experiences that place barriers in front of users throughout their payment journeys (Brock)
• Incohesive reporting and reconciliation of siloed solutions that don’t work together as they have been added on top of each other piece by piece (Argus)
• Legacy systems that impact the entire process but seem impossible to change, making it more difficult to digital offerings (Ingrid)
• Outdated payment platforms and sluggish systems that get in the way of seamless transactions (Mort)
• Vulnerability in systems resulting in cybersecurity risks that sting billers in the transaction process (Stinger)
• Poor user experience and an unattractive user interface that makes it tricky for the person using the platform to make a payment (Crunkus)
“I would say most of our billers are dealing with a half dozen or more at a time, and
there’s only nine. That’s a big statement,” says Haskins as she explains how Monsters can help a customer assess the status of their billing and payment system in its current state.
“You have different teams within a biller agency that are trying to solve different problems, so it’s never just a siloed purchase. It’s a finance purchase that also includes the person in charge of customer experience and support. Ultimately, you might have
Companies dealing with this Monster will recognise the need to develop their user experience as an important component of the payment function. Crunkus is made to look ugly to represent how the system looks on the front end and will ultimately equate to a dissatisfying user experience.
Taming Crunkus can be done by creating a convenient, easy to use means of paying bills, any-time payment solutions, increasing flexibility, and providing users with more options for viewing their bills.
With Argus around, you never know which way to look. This represents the typical scenario whereby a customer is faced with multiple incohesive components pieced together to temporarily enable new functions. This problem usually includes multiple vendor relationships to manage and very complex reporting mechanisms.
The idea of creating these monsters is akin to a pinpointing exercise that allows customers to quickly see the faults and inefficiencies within their processes, which not only identifies the underlying problems but helps companies quickly get to the point of action.
“Customers start to understand these common problems and begin to ask, ‘what other issues do we have?’ They start to fit them into other monster personalities and realise what keeps them up at night,” says Haskins.
While the goal isn’t to give customers nightmares or pretend that there are monsters hiding in their closets, understanding the effects that these characters have on their businesses is what allows Paymentus to take action and support clients with holistic services.
payment with multiple stages thrown in, information to complete, and security to be dealt with. This is caused by Brock, and as tired as customers are with clunky payment experiences, he also has an exhausting job putting barriers in the way.
Brock could be the monster scaring away customers in the payment stage as the time it takes to complete payment information or the sheer level of detail required, may just be too much for everyone.
Paymentus addresses the key problems that arise on a day-to-day basis. Chris Trainor, Vice President of Growth and Strategic Partnerships at Paymentus, explains the specific approach taken by clients that often results in the greatest positive impact.
“In our experience working with thousands of billers, including more than 25 Fortune 500 companies, the most important step in a successful modernisation journey is a mindset shift.”
“Inertia (Ingrid) is a powerful and dangerous anchor that hinders progress. To counter this dynamic, we’ve designed our platform, integration capabilities, and onboarding experiences to simplify change for the billers, enabling modernisation
“Customers start to understand these common problems that span multiple departments and affect their consumers significantly, and begin to ask ‘what other issues do we have?’”
NICOLE HASKINS VICE PRESIDENT OF SALES & MARKETING, PAYMENTUS
regardless of a biller’s perceived and real constraints.”
“Organisations that are challenged by legacy and outdated solutions cannot resolve those issues with outdated thinking. Those that apply broad, cross-functional solutions focused on elevating their user experiences have the best outcomes.”
Suboptimal user experience is the domain of Brock. Taming him means reducing the number of barriers in the payment process to create a fast, simple way to complete a transaction with less friction in the customer’s preferred interaction channel. This ethos is what led to the expansion of the Instant Payment Network to include bill presentment and payments through digital wallets like PayPal,
Stuck with a legacy system or an outdated way of working?
This is likely a result of Ingrid’s wrath as she ensures systems aren’t to evolve any time soon. This makes them heavy and cumbersome and the user will be dying to get their hands on a newer, simplified solution.
This usually consists of outdated payment systems and legacy solutions, creating an overwhelming reluctance to transform. But, this is where customers must break free and implement AI and machine learning to improve the speed of interactions — a chatbot solution to assist users being a great example.
While Mort isn’t as brash as Ingrid, he’s not in a hurry to update platforms and can leave things looking a little messy. He’s got a weight on his back that prevents customers from revamping their outdated payment solutions, and leaves them facing a slippery slope if left untamed.
at thousands of retail locations via a barcode, at over 300 banks and through intuitive text and chatbot-based experiences.
In addition to extending a biller’s reach, Paymentus maintains a constant focus on improving user experiences in all interaction channels. Recent enhancements like ‘remember me,’ and known phone number recognition, allow customers to authenticate and check out securely without the need to provide account details.
“The single greatest point of breakage in bill pay is at the authentication step. Consumers rarely remember their account numbers and often forget their login credentials, leading to poor user experiences when trying to make a payment, as well as inbound phone calls to the biller. Paymentus has developed numerous innovations, several of which are patented, to streamline the process for consumers while minimising PCI burden for billers,” says Trainor.
Avoid the need to build the perfect payment solution Recognising that many of the billing and payment providers on the market allow customers to build their preferred solutions, Paymentus looks to alleviate this step through its holistic, best in class bill presentment and payment solution.
By developing an integrated solution with a number of different functions and expanded payment methods and channels intertwined with minimal coding adaptations, Paymentus’ service – coupled with its
Keep tabs on security, because Stinger is known for looming in the background and silently causing havoc in a number of different areas if left to Stinger’s own devices. Not only does this represent the importance of cybersecurity, but the nature of hackers and their attacks on billers’ information.
Keeping tabs on security, compliance and sensitive customer data through working with a trusted billing and payment provider is crucial for keeping this beast at bay.
solutions to identify problems
– allows a more proactive approach and helps companies continuously monitor their processes with the key pain points in mind.
Working with Paymentus, customers are able to leverage the company’s expertise in billing and payment activities and minimise the need to inject resources into optimising this for themselves – all while gaining a good night’s sleep.
While today’s billing and payment monsters may always be lurking, Paymentus has the demonstrated success and proven long-term strategy to keep them tamed and contained.
NFTs have transformed the way we think about digital artworks – but could there be a similar symbiosis between digital assets and sports merchandising?
WRITTEN BY: ALEX CLERE
Non-fungible tokens (NFTs) have already made significant inroads into digital artwork, changing the way it is bought and sold, but do these collectible and tradeable digital assets offer a future revenue stream for sports merchandising too?
According to the authors of a Deloitte analysis of NFT’s prospective role in sports merchandising, NFTs could become the digital equivalent of baseball cards – which, because of their scarcity, often sell for high sums. This scarcity can be replicated in NFTs, making them seem desirable and collectible; and giving fans the opportunity to acquire, not just view, officially licensed media
belonging to their favourite sports teams –although Deloitte says that, to date, many of the NFTs used in sports merchandising have not involved ownership of the underlying media.
Despite their potential to transform sports marketing, NFTs are still relatively nascent in an old-fashioned marketplace. Take football, or soccer, for example. The world’s most popular sport increasingly brings together diverse crowds, particularly in the European game – young and old, men and women, gay and straight.
This gives a much truer-to-life outlook on emerging technologies than other verticals where digital assets are being employed,
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DOMENICO NOVELLA GLOBAL COMMERCIAL DIRECTOR, ENTOURAGE SPORT & ENTERTAINMENTsuch as social media or gaming, which tend to feature younger and less diverse audiences. For example, some top-tier football clubs in Europe are still using paper tickets instead of digital admission cards – so what hope is there of encouraging football fans to embrace NFTs and digital assets?
Domenico Novella, Global Commercial Director at Entourage Sport & Entertainment, accepts that they are relatively immature as a proposition: “NFTs come with compelling narratives that can not only bring commercial value but create communities or offer long-term perks,” he tells FinTech
Magazine. “They have the potential to retain value and sustain interest among collectors. But while the potential for NFTs to have a future cannot be dismissed, it is evident that their current level of interest and engagement is relatively low.”
The Premier League – the world’s most streamed and most commercially successful football league – is watched by an international audience of over 3bn people. Clearly, this broad-church of demographics makes it more challenging to encourage adoption of NFTs among football fans, but the lucrative nature of the market still makes it an attractive proposition.
“WHILE THE POTENTIAL FOR NFTS TO HAVE A FUTURE CANNOT BE DISMISSED, IT IS EVIDENT THAT THEIR CURRENT LEVEL OF INTEREST AND ENGAGEMENT IS RELATIVELY LOW”
“The potential of NFTs lies in attracting rights holders who recognise the opportunities they offer,” Novella continues. “However, the viability of NFTs for rights holders may depend on existing long-term contracts with providers or suppliers, making it challenging to transition. The success of NFTs ultimately relies on convincing people to embrace the concept and invest in it.”
The Premier League has recently announced a voluntary ban on front-of-shirt sponsorships from gambling companies, after spectators voiced concerns about the social impacts of gambling on the game. After several years of increasing visibility for crypto firms, this opens up the prospect that cryptocurrency exchanges and NFT companies might step in and fill the void.
At the time of writing, two clubs were yet to announce front-of-shirt sponsors for the
forthcoming season; seven have already confirmed gambling companies, with the sponsor ban not beginning until 2026, and no team has a front-of-shirt crypto sponsor. So, will we see more crypto sponsorships and brand partnerships in the coming years, once gambling companies are sidelined?
“The growth and stability of the market, along with the presence of bitcoin, are crucial factors that can enhance the potential of sponsorships,” Novella says. “Currently, it is challenging to achieve success due to a cautious approach by many, waiting to see how the market develops. Investing heavily for teams in marketing without a proper acquisition strategy may lead to difficulties in achieving a positive return on investment (ROI).”
He is confident that teams won’t face pressure to drop crypto sponsors in a
few years’ time, like they have done with gambling firms: “The potential of NFTs can be enhanced through supportive regulations, but currently, the focus is more on the betting industry. Brands that sponsor and invest in sports see positive returns and profitability through their association with rights holders. Similarly to betting, the crypto market experienced a decline due to reduced profitability opportunities. Overall, the current market conditions have limited the potential for financial gains in both NFTs and crypto.”
A trend which has risen to the forefront in recent years is the growth of ambassadorships – using a well-known celebrity to promote a crypto company. “Collaborating with celebrities or
“IMPLEMENTING FAN TOKENS… CAN PROVIDE AN EXCITING OPPORTUNITY IN SPORTS WHERE FANS CAN ACTIVELY PARTICIPATE IN DECISION-MAKING”
DOMENICO NOVELLA GLOBAL COMMERCIAL DIRECTOR, ENTOURAGE SPORT & ENTERTAINMENT
DELOITTE REPORT
ambassadors can be beneficial, as they bring along their existing fan base, which can be converted into users,” Novella explains.
Of course, this doesn’t have to be sports stars and sports teams; it could be entertainers like actors and musicians. But, perhaps recognising that sports will play the bigger role in driving NFT adoption, many crypto firms have been utilising celebrity endorsements. Binance released a collection of NFTs in collaboration with Portuguese footballer Cristiano Ronaldo; Formula 1 star Daniel Ricciardo became an ambassador for crypto exchange OKX; and numerous sports teams have announced sponsorships or partnerships with DeFi companies, notably Italian side Inter Milan, which is working with Socios.com to provide fans with an $INTER token that they can buy and trade.
“Implementing fan tokens… can provide an exciting opportunity in sports where fans can actively participate in decision-making,” Novella says. “Blockchain technology is crucial for the growth of the sports industry,
offering a way to enhance both the sporting and commercial aspects. Additionally, integrating blockchain can create an enjoyable match day experience for fans, ultimately benefiting both the sport and its commercial aspects.”
Ultimately, however, teams have to be successful on the pitch, on the court, or in the rink. Professional sports – particularly professional football – is experiencing some degree of disruption, with new leagues threatening to emerge and constant debate about how the game is financed. There are many recent examples of companies taking out sponsorships with high-profile sports teams under the belief that they will do well that season, progress through competitions and enjoy lots of broadcast exposure –only for the team to crash out early, endure an uncharacteristically bad season, and for the sponsor not to renew at the end of the contract.
In April 2022, English fourth-tier side Crawley Town were taken over by a group of American cryptocurrency investors. On the face of it, WAGMI’s acquisition of the club had the potential to revolutionise the relationship between sport and cryptocurrencies. But the club has had a tumultuous time on the pitch ever since, finishing that season in 12th and ending WAGMI’s first full season in charge just three points clear of relegation.
They will, of course, be hoping for a better finish this season – but perhaps it delivers a warning message, that crypto investors must secure buy-in from existing football fans rather than trying to bring crypto enthusiasts into the sports arena. Nonetheless, it will be interesting to see what becomes of NFTs in professional sport – something that Deloitte predicts is already set to become a US$2bn-a-year industry.
The need for reliable and secure remittances services has never been higher. According to the United Nations High Commissioner for Refugees (UNHCR), there are now more than 110m displaced people in the world, forced to flee their homes because of circumstances like war or famine.
The problem has been exacerbated in the last couple of years by Russia’s invasion of Ukraine, the return to power of the Taliban in Afghanistan, and the military coup in Niger – the West African nation once a bastion of peace on the continent, now a clear demonstration that conflict and unrest are rapidly becoming part of everyday modern life.
Refugees and asylum seekers present their own challenges when it comes to remittances: the countries they are fleeing are, more often than not, relatively unstable with little or no payment infrastructure. They may present a patchwork of different
payment cultures – from mobile payments to wire transfers.
And, of course, even without the nationby-nation idiosyncrasies that make remittances more complex, there are the usual hurdles that come with moving money across borders. This is without even touching upon the additional demographic of economic migrants – people who move for work, rather than fleeing war or persecution, who inevitably want to send money back home to friends and family.
Speaking to FinTech Magazine at Money20/20 Europe in Amsterdam earlier in the year, Global Head of the Wise Platform Abid Mumtaz explained to us some of the challenges that persist when it comes to cross-border payments.
“Moving money generally across borders has always been a very difficult thing when
Economic migration and refugees fleeing war and persecution continue to add a layer of complexity to the challenge of cross-border payments and remittances
Harness the power of data and leading-edge technology to turn existing know your customer (KYC) and anti-money laundering (AML) compliance challenges into opportunities
it comes to businesses and consumers,” Mumtaz told us. “Three or four things stand out to me. One is the speed at which money moves. People today need money to arrive with the beneficiary as fast as possible and as instantly as possible, more than they used to.
“Secondly, they want it to arrive as low cost as possible with as few fees as possible. Thirdly, [they want it] as transparent as possible; they want to know when their money will arrive, how much will arrive, and they want a high level of accuracy.
“The fourth thing really comes down to convenience – so moving money generally speaking is quite a cumbersome process, especially when it comes to doing that cross border. They want that to be as easy as possible, as convenient as possible, within a few steps or a few clicks – just as we’re seeing across most of the banking and financial journeys we’re seeing today.”
Maintaining that level of service when the picture on the ground is changing so rapidly, and to such an extent, is a dilemma that keeps remittances professionals awake at night.
“PEOPLE TODAY NEED MONEY TO ARRIVE WITH THE BENEFICIARY AS INSTANTLY AS POSSIBLE, MORE THAN THEY USED TO”
Is the developing world geared up for remittances?
Shanker Ramamurthy, BIAN Board Member and Global Managing Partner for Banking and Financial Markets at IBM Consulting, claims developing countries still face a host of challenges when it comes to banking, transacting and personal finances.
“A lack of financial inclusion leaves them vulnerable to exploitation, limited opportunities for savings and investments, and, importantly, a lack of access to credit,” Ramamurthy says.
“Low levels of financial literacy hinder people’s ability to make informed financial decisions, which can perpetuate poverty and economic inequality; while the cost of completing financial transactions in developing countries can be high, making it difficult for people to access financial services and for small businesses to operate profitably.
“Many developing countries lack the infrastructure necessary to support modern financial services, including reliable telecommunications networks, banking infrastructure, and secure payment systems. Some developing countries have weak regulatory frameworks, which can lead to a lack of consumer protection and low levels of trust in financial institutions.
“And gender inequality is prevalent in many developing countries, which can limit women’s access to financial services and economic opportunities. These challenges can make it difficult for people in developing countries to access financial services and participate fully in the economy.
“Addressing these challenges requires a multi-faceted approach that involves building financial infrastructure, promoting financial literacy, improving regulation, and addressing social and economic inequalities.”
Ramamurthy suggests that “financial institutions who want to be part of the solution to improving financial inclusion around the world should consider adopting the architecture standards put forth by the Banking Industry Architecture Network (BIAN)”. They should be “embracing a hybrid cloud approach to their technology infrastructure and leveraging the power of a robust, regulatory compliant ecosystem of fintech partners,” he adds.
“THE COST OF MAKING FINANCIAL TRANSACTIONS IN DEVELOPING COUNTRIES CAN BE HIGH, MAKING IT DIFFICULT FOR PEOPLE TO ACCESS FINANCIAL SERVICES”
SHANKER RAMAMURTHY BIAN BOARD MEMBER
“By taking these steps, banks and other finance providers are better positioned to implement innovations quickly.”
Despite the challenges that unquestionably still exist within remittances, there is nonetheless still cause for optimism. The global remittances market is expected to grow to a valuation of US$107.8bn by 2030, achieving a compound annual growth rate (CAGR) of more than 10% between 2022 and 2030, per forecasts published by Research and Markets.
And Wise’s Abid Mumtaz retains a positive attitude when he looks ahead to the future of remittances, and where he expects it to be in the next decade.
“5-10 years from now, we’ll probably be in a world where instant is very much adopted,” Mumtaz says. “Today with Wise, we’re proud to say that 55% of our payments moving around the world are settling into the beneficiary’s bank within 20 seconds, but the market still has a way to catch up and we still have plenty of work to do to get to 100%. I think that’s where we’re going to be spending a lot of time [in the coming years].”
“MOVING MONEY GENERALLY ACROSS BORDERS HAS ALWAYS BEEN A VERY DIFFICULT THING”
ABID MUMTAZ GLOBAL HEAD, WISE PLATFORM
8 - 9 November 2023
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