Issue 38
How Arca Fondi SGR is Prioritising Digital Services and Sustainable Investment Opportunities Ugo Loeser is the CEO of Arca Fondi SGR
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EDITORS LETTER
FROM THE
editor
Chairman and CEO Varun Sash Editor Wanda Rich email: wrich@gbafmag.com
Dear Readers’
I am pleased to present Issue 38 of Global Banking & Finance Review. For those of you that are reading us for the first time, welcome. This issue is filled with exclusive insights from financial leaders across the globe.
Head of Distribution & Production Robert Mathew Project Managers Megan Sash, Amanda Walker Video Production and Journalist Phil Fothergill Graphic Designer Jessica Weisman-Pitts Client & Accounts Manager Chanel Roberts Business Consultants Rick Saikia, Monika Umakanth, Stefy Abraham, Business Analysts Samuel Joseph, Dave D’Costa Advertising Phone: +44 (0) 208 144 3511 marketing@gbafmag.com GBAF Publications, LTD Alpha House 100 Borough High Street London, SE1 1LB United Kingdom Global Banking & Finance Review is the trading name of GBAF Publications LTD Company Registration Number: 7403411 VAT Number: GB 112 5966 21 ISSN 2396-717X. The information contained in this publication has been obtained from sources the publishers believe to be correct. The publisher wishes to stress that the information contained herein may be subject to varying international, federal, state and/or local laws or regulations. The purchaser or reader of this publication assumes all responsibility for the use of these materials and information. However, the publisher assumes no responsibility for errors, omissions, or contrary interpretations of the subject matter contained herein no legal liability can be accepted for any errors. No part of this publication may be reproduced without the prior consent of the publisher
Featured on the front cover Ugo Loeser the CEO of Arca Fondi SGR. Founded almost 40 years ago to serve the typical Italian saver with a basic understanding of finance and a low-risk propensity, Arca Fondi SGR specialises in long-term investing. Today, Arca manages mutual funds, pension funds and institutional accounts, reaching more than 100 banks and financial institutions and serving over 800,000 clients. I recently spoke to Ugo about the strides Arca has made in ESG products such as Arca Oxygen Plus, innovative product creation, and tech advances that improve access to the services its clients need. (Page 22) Turn to page 8 to read my exclusive interview with Mr. Hoang Anh Duc, Deputy General Director of Bao Viet Life Corporation. Founded in 1965 Bao Viet is Vietnam’s largest insurance company and began offering life insurance in 1996. Bao Viet Life is the insurance brand built by Vietnamese People, for Vietnamese people. Mr. Hoang Anh Duc, Deputy General Director of Bao Viet Life Corporation discusses supporting customers through COVID’s latest challenges, some of the new products that the company has launched in the last year, and the unparalleled relationship that endures between the brand and the people of Vietnam. We strive to capture the latest news about the world's economy, financial events, and banking game changers from prominent leaders in the industry and public viewpoints with an intention to serve a holistic outlook. We have gone that extra mile to ensure we give you the best from the world of finance. Send me your thoughts on how I can continue to improve and what you’d like to see in the future.
Enjoy!
Wanda Rich Editor
®
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Issue 38 | 03
CONTENTS
BUSINESS
24
Creating Community Through Dining Experiences
BANKING
18
How does Banking-as-a-Service create opportunity for global businesses?
Leonardo De Aguiar CEO and Founder INTUEAT
James Butland VP of Financial Partnerships Airwallex
30 Leveraging Mobile Tech Key to
Beating Retail’s Supply Chain Crisis
26
Stefan Spendrup Vice President of Sales Northern and Western Europe SOTI
Michael D'Onofrio CEO Orbus Software
Why data democratisation is a
40 gamechanger for business Paul Scholey Vice President of International Sales Sisense
3 ways the banking sector can overcome the challenge of change and control
28 Tackling fraud: What you need to know about permissioned co-banking
Dr Rachel O’Connell, CEO, TrustElevate, Aebha Curtis, senior policy and regulatory affairs specialist, TrustElevate
FINTECH
20
The Fintech Road to Carbon Neutrality Aaron Yeardley Carbon Reduction Engineer Tunley Engineering
38 How to encourage more women into fintech
40 04 | Issue 38
Uma Rajah CEO and Co-Founder CapitalRise
CONTENTS
FINANCE
16
32
What’s next for Payments? Ron de Bos Director Product Management – Payments Digital River
12
36
Making the most of telecommunications in the education sector Simon Blackwell CMO TelcoSwitch
Three reasons why virtual cards will take off in 2022 John Sturino Vice President of Product and Technology Egencia
The 7 transformational technology trends to revolutionize the financial sector in the post-pandemic era Sam Barton Group CTO Smart
Ego, Culture and Learning: Three critical factors to an M&A deal Karen Thomas-Bland Founder Seven Transformation
44
TECHNOLOGY
48 Death and taxes—why you
won’t be able to escape one in the metaverse
46 Preventing fraud amidst the Great
Jackie Kyle Director of strategy and corporate development Digital River
Payments Disruption
Jenn Markey Vice President of payments and identity product marketing Entrust
50
Cybersecurity in the Financial Services Industry Alfredo Rubina Vice President of Financial Services SoftServe
44 Issue 38 | 05
CONTENTS
INTERVIEW
8
BAO VIET LIFE THE INSURANCE BRAND BUILT BY VIETNAMESE PEOWPLE, FOR VIETNAMESE PEOPLE Exclusive interview with Mr. Hoang Anh Duc, Deputy General Director of Bao Viet Life Corporation.
22
COVER STORY HOW ARCA FONDI SGR IS PRIORITISING DIGITAL SERVICES AND SUSTAINABLE INVESTMENT OPPORTUNITIES Ugo Loeser CEO Arca Fondi SGR
06 | Issue 38
More than...
40 years serving Egyptian Economy 230 branches in all Egyptian governorates 6900 banking professionals at your service 870 ATMs
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INTERVIEW
BAO VIET LIFE - THE INSURANCE BRAND BUILT BY VIETNAMESE PEOPLE, FOR VIETNAMESE PEOPLE Bao Viet was founded in 1965 and is Vietnam’s largest insurance company. It began offering life insurance in 1996. Mr. Hoang Anh Duc, Deputy General Director of Bao Viet Life Corporation, spoke with Global Banking & Finance Review editor Wanda Rich about supporting customers through COVID’s latest challenges, some of the new products that the company has launched in the last year, and the unparalleled relationship that endures between the brand and the people of Vietnam.
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He began by explaining the more recent effects of COVID’s ongoing presence on the country. “In Q3 of 2021, the fourth wave of the COVID-19 pandemic broke out in Vietnam with a rapid and extremely dangerous spread, threatening the health and lives of many people. The strict blockades and prolonged distance in many provinces and cities have negatively affected people’s daily lives, as well as the production and business activities of many enterprises.”
INTERVIEW A few key fundamental market numbers from 2021 back this up. According to the General Statistics Office of Vietnam, the total number of enterprises entering and re-entering the market in 2021 was less than 160,000, down 10.7% compared to 2020. 119,800 enterprises withdrew from the market, an increase of 17.8%, of which the majority were enterprises established under 5 years earlier with small capital scale. “The insurance industry in general - and life insurance in particular - is one of the few industries that can maintain business operations and continue to grow during the COVID-19 pandemic,” Mr. Hoang Anh Duc said, an assertion that is supported by estimated data from the Vietnam Insurance Association. In 2021, it valued the total insurance premium revenue of the market as a whole at 217,338 billion VND, up 16.71% on 2020, of which life insurance premium revenue was estimated at 159,458 billion VND, up 22% year on year. New operating revenue in 2021 reached 48,727 billion VND, up 16.2% compared to 2020. The number of new operating contracts in 2021 reached 3,554,018 (main products), an increase of 14.25% year on year. Also in 2021, insurance companies made payments of 32,814 billion VND, up 24.78% year on year.
It therefore follows that Bao Viet Life has had to keep its finger on the pulse of what the Vietnamese market needed in that time. “In 2021, while facing the COVID-19 pandemic, Bao Viet Life Corporation actively adapted, innovated and flexibly adjusted business activities and governance to continue to lead the market,” Mr. Hoang Anh Duc confirmed. “Together with the government, Bao Viet Life has not stopped making efforts to realise the dual goal of ensuring people’s health while maintaining and developing business activities. We have continued to maintain our leading position in the market, with original premium revenue of 30,558 billion VND, up 9.0% compared to 2020. Bao Viet Life has issued nearly 300,000 new operating polices, paid tax of up to 510 billion VND - of which more than 215 billion VND is corporate income tax - and created jobs for more than 45,000 new consultants, bringing the total number of staff and consultants up to 240,000.” The company also invested in infrastructure, equipment and the operation of nearly 400 regional offices nationwide in 2021, which he noted has brought superior services, products and dedicated care closer to the Vietnamese people. “At the same time, it increases the competitive advantage of the large distribution channel, which is the outstanding advantage of Bao Viet Life,” he pointed out. “Expanding the regional office network to remote districts has met the demand for financial solutions for people in the area, and created many stable jobs and high incomes for people in all regions of the country. Concurrently, we’ve been enhancing the perfect customer service experience through the team of officers, staff, secretaries and consultants at the regional office system to promptly receive and answer questions, provide support, and resolve benefits for customers.” He also spoke on the company’s philanthropic endeavours that have helped the country to work towards rebuilding in a post-COVID environment. “When the fourth wave of the pandemic broke out - the most stressful and fierce period of Vietnam Bao Viet Life was the first unit and contributed the most to the government’s COVID-19 vaccine fund with the amount of 30 billion dong,” he recalled. “At the heart of all 76 member companies and general agent channels in 63 cities, including all Bao Viet Life staff and financial consultants, is generosity, through giving money, clothes, necessities for the sick, and supporting doctors, hospitals and families living in the blockade. Bao Viet Life has maximised the spirit of solidarity and sharing by joining hands with the government and population to overcome the most dangerous period of the pandemic. ‘Good leaves cover torn leaves!‘”
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INTERVIEW
That is not to say that the insurer’s focus has strayed from ensuring that it offers its clientele the most competitive advantages possible; indeed, Mr. Hoang Anh Duc underscored the point that Bao Viet Life’s success stems from placing customers at the centre of all its activities. “The interests of customers are always guaranteed. In 2021, Bao Viet Life’s total amount of all compensation and insurance payments was more than 9,000 billion VND, including policy maturity payment (2,300 billion dong), payment for risk insurance benefits (1,000 billion dong), payback value (4,600 billion dong), and other payments under insurance policies (1,100 billion VND).
“In addition, nearly 1,300 customers were supported with special insurance benefits between February 2020 and November 2021. More than 1,500 unlucky customers who were at risk due to COVID-19 in 2021 received insurance benefits from Bao Viet Life, with a total payout of over 35 billion VND. Currently, the COVID-19 risk cases are still handled by Bao Viet Life with insurance benefits according to the terms.”
He also explained how the company has gone the extra mile when it comes to supporting the Vietnamese population. “In 2021, Bao Viet Life deployed thousands of healthcare consulting programmes, such as cancer and stroke prevention, COVID-19 prevention and postCOVID healthcare, directly and online with the cooperation of many leading experts and doctors. Bao Viet Life is proud to be one of the life insurance companies deploying the most healthcare consulting programmes for customers and people in Vietnam.”
Other adjustments that have had to be implemented over the past few years have included addressing increased demand, not just for the company’s services, but for new ways of delivering them. “During the COVID-19 pandemic, customers have had high demand for insurance products to prevent risks caused by the disease,” Mr. Hoang Anh Duc said. “In order to meet the insurance needs of customers while ensuring compliance with COVID prevention, Bao Viet Life quickly adjusted the operation process and deployed appropriate technology solutions to help customers receive insurance advice, and declare and complete the
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For many businesses during the period of social distancing, maintaining good customer service practices over the phone proved to be a challenge. However, as Mr.
Hoang Anh Duc reported, Bao Viet Life employed its best efforts to ensure that this challenge was both met and overcome. “The operation of the customer service call centre was maintained in the best way, through listening, consulting, answering questions and sharing customers’ difficulties,” he said. “The number of incoming calls answered by the call centre in a month is more than 2,000. In addition, in order to ensure safety in the context of the complicated COVID-19 situation, Bao Viet Life has promoted a variety of fee collection channels, whereby customers can pay fees by e-wallet, mobile banking or bank card.”
insurance claim documents remotely. It is estimated that several tens of thousands of customers have been consulted remotely, and declared insurance applications and received policies electronically. “SalesPlatform, our new sales software, helps to increase the utility and business tools for consultants,” he continued. “It supports many deployment forms of application for insurance - traditional documents, wet-ink signing online and e-sign documents - to serve a variety of different customers. It improves the policy issuance process and the quality control efficiency of declared information and customers’ interests. Consultants
INTERVIEW
advise customers via remote means - Zoom, Zalo, FaceTime etc. - while customers declare and remotely sign insurance claim documents.” Being in the field of life insurance, Bao Viet Life strives to understand the worries and difficulties of people when facing risks, especially disease risks. “Since 2016, we have maintained healthcare consulting programmes and healthcare call centres for people across the country,” Mr. Hoang Anh Duc revealed. “The experts collaborating with Bao Viet Life are excellent - associate professors and leading doctors of central hospitals.
The company’s efforts in this area have also included the launch of new health-focused products. “With the same focus on care and protection of people’s health, in 2021, Bao Viet Life launched the An Khang Hanh Phuc product and, in March 2022, a healthcare product named An Vui Song Khoe. All products researched and launched to the market by Bao Viet Life have the same preeminent feature of bringing the best care and health protection to customers. Bao Viet Life’s An Khang Hanh Phuc and An Vui Song Khoe products are highly trusted and have been well received by people across the country.”
“Particularly during the years since the outbreak of COVID-19, Bao Viet Life has increased its healthcare and consulting activities. During the period of social distancing, when in-person events could not be held, Bao Viet Life increased its online events. Thousands of counselling programmes on COVID prevention, post-COVID healthcare, and the prevention of dangerous diseases such as cancer and strokes were implemented by Bao Viet Life in 2021.”
The conversation came to a close with Mr. Hoang Anh Duc’s overarching thoughts on the company’s current position and its commitment to supporting Vietnam’s ongoing growth. “Bao Viet Life is proud to be a business of sustainable development, and for many years has continuously led the life insurance industry in Vietnam,” he disclosed. “The achievements of Bao Viet Life are crystallised from the efforts, dedication and one-hearted service
to the Vietnamese customers on behalf of Bao Viet Life’s leadership, staff and financial consultants across the country. At the same time, it is also a result built on the trust, love and companionship between the Vietnamese people and the Bao Viet Life brand during the past 26 years. “In Vietnam, life insurance has been, is and will continue to be an essential product serving the protection, healthcare, savings and investment needs of every family,” he added. “Bao Viet Life is committed to protecting Vietnamese families with the best products, being a reliable companion, bringing happiness and peace to the people, and contributing to the construction and development of society, helping the country of Vietnam to increasingly develop and flourish.”
Issue 38 | 11
TECHNOLOGY
The 7 transformational technology trends to revolutionize the financial sector in the post-pandemic era
Sam Barton is Group CTO at Smart, the global retirement technology provider backed by J.P. Morgan, LGIM, and others. Sam describes the 7 transformational trends with the power to boost the financial sector forward to meet the new needs of Americans. Just three short months into the new decade, the world as we knew it changed so significantly that we all had to reinvent our daily lives as working and learning from home became an international responsibility. Throughout this unprecedented period, rank-and-file technology workers became the unsung heroes who kept the lights on for the financial services industry. For years, the industry was happy to maintain on-premises hardware and the systems to support them, but a sudden loss of staff in offices created a point of inflection in how we interact with the systems that support our work. 2021 kicked off these initiatives in earnest, but it’s clear there is more work to be done. So, what is in store for 2022 and beyond?
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1 - Process automation vs people processes The industry has long been moving to paperless processes or screenscraping programs that pull data from discordant systems. It’s also not uncommon to employ third party workflow tools that add automation as a veneer over the systems that can’t be automated. In any case, the end result is still people-powered. To be more resilient and truly leverage the cloud-based solution, these journeys need to be entirely automated, including when it comes to leveraging customer self-service opportunities to minimize business processes. Automation brings huge cost savings as computers work 24/7, are less prone to error, and don’t need paid holidays. Still, process automation is often overlooked in the transformation project, as the target of achieving a new cloud-based solution is more visible as a deliverable. However, in order to leverage new real-time data and scalable solutions, automated processes need to replace overnight batch jobs, retired on the journey into the cloud.
Similarly, as an organization builds a cloud-based infrastructure, new deployment pipelines are needed. Instead of a team provisioning a new server and promoting a pre-production environment to production, the same process is now written as code (Infrastructure as Code) using templates that define the environment variables, the build, and even operating system of the instance the software will be installed on. Instances are created and destroyed in minutes all via automated deployment processes (CI/CD) that have built-in tests to report on their performance. As the business embarks on this transformation, it must shine a light down every tunnel and ensure each department meets the new target architecture. 2 - Business intelligence vs artificial intelligence All businesses rely on data to monitor various performance metrics. These business intelligence reports have always existed in one form or another, and became “Big Data” as information moved away from paper and became more digital. What’s new is how this data is mined and managed.
TECHNOLOGY
Sam Barton Group CTO Smart
Artificially generating those reports will be a big focus as the transformation projects near completion. As more data is captured, BI reports also need to accelerate and the old ways of inspecting data need to be reinvented. For example, it is understood that fraud is best caught by machine learning tools that flag values that fall out of a defined tolerance. Moving that defined tolerance to one that is re-evaluated in real time by a more reactive and ML based decision tree (AI) is a necessary milestone. 3 - Security by design Each step on the transformation journey offers a potential point of ingress and egress for customer data or important financial information. Just like the BI point, this data is now moving at a faster rate, meaning automation is needed to scan for vulnerabilities and detect issues in real time, which includes building in automated, real-time threat detection. We’re not going to do away with those annual penetration tests, but we are going to add more defenses, meaning that the next penetration test has less to report on.
This is as much a software problem as it is a cultural one, as the mindset of software engineering needs to adapt to suit the new architecture. The test suite in the Continuous Integration server needs to include security tests and the Continuous Deployment pipeline should also be augmented to scan for vulnerabilities. At the same time, those writing the code need new development guides that spell out best practices, and the quality engineers testing the feature need to inspect for security weaknesses while ensuring the feature meets its intended business requirements. Security by design is not a single policy, but a cultural shift that sees a business unit taking ownership of the security of its products and services.
systems, creating a pair of competing policy interests pulling in opposite directions. The inevitable compromise was to agree on a hybrid-cloud model. The legacy administration products stayed on-premise and a new cloud-based digital experience layer was introduced. This made logical sense in a pre-pandemic era. But just as working from home became mandatory for the employee, the idea of a fully cloud-native solution soon became mandatory for the business. 2021 was the year to accept this revelation, and 2022 will see the death knell of the on-premise solution. Businesses will go fully cloud-native not only to protect themselves from customer migration, but also reduce internal productivity losses and build better disaster recovery solutions.
4 - Hybrid-cloud vs cloud native 5 - Serverless vs microservices To stay relevant to a customer base demanding a more engaging digital experience, businesses have invested heavily in cloudpowered technologies. But as these budgets were being approved, no one thought to also transform the business processes and culture of the people who support the legacy
Going fully cloud-native is not a turnkey activity. The initial attempt to simply move the on-premise software into a cloud-based equivalent machine will soon reveal incompatibilities. The legacy software was not designed to leverage cloud-native hardware.
Issue 38 | 13
TECHNOLOGY
Lambda Functions, a product offered by AWS, enable the quick introduction of features that don’t require complex infrastructure to support them, making them much more agile in both delivery and in the procurement and approval processes. There is simply less to review by the business and technology staff. It’s an efficient means for the business to achieve the first foothold into a cloud-native solution and one expected to see greater adoption once the precedent has been set. The concept of a Service Oriented Architecture (SOA) is not new and in fact Microservices are considered contemporary in the financial industry today. But if the Service is written in a way that depends on an on premise solution, its performance is locked to the limitations of that machine. By moving the same feature to a Serverless solution, one where the infrastructure scales seamlessly behind it, the small (micro) Service evolves to become Serverless and the business can justifiably say it has achieved its first milestone on its digital transformation roadmap.
6 - Cloud data vs legacy policy documents By their nature, startups disrupt established markets. Project leads overseeing Digital Transformation for established businesses share this aspiration. While it is often easy to agree on technical strategy, the hardest part of a transformation project is less visible at project kick-off. Just like legacy software, business operations are hardcoded into policy documents and have shaped the very DNA of the business. Long-held practices can shape everything from business processes to workplace culture. The overnight lockdown of 2020 led to a strategic assessment of many of these policies, as operations teams had to suddenly access customer data while working from home. But as we accept this new norm, the policy bandage has yet to be taken off. So as we introduce new technology, it is equally important to challenge documents that don’t suit cloudbased solutions.
The end goal is to move customer data away from on-premise hardware and into a scalable cloud-based solution. Software and data can finally be reunited in a real-time solution and those overnight batch jobs finally disappear, signaling another major milestone on the transformation roadmap. 7 - Responsibility and sustainability The financial services industry is no stranger to sustainability. Customers want to ensure their money is invested responsibly, and ESG funds are the mainstay of any wealth product today. But while that external accreditation has been met, the new focus is on the footprint the businesses themselves leave behind. Original on-premise solutions were stood up in data centers designed to meet the demands of the busiest day of the year. But today’s cloud-based architecture can intelligently scale up on demand as customers rush to use the product online, and scale down again in quieter hours. using less electricity. This simple example saves money while also contributing towards the sustainability report for the business. The same logic applies across the business. Offices are aware of when someone is working from home and turn off their workstation and associated office lights. Conclusion The aforementioned topics collectively add up to a necessary to-do list for any business that has withstood the challenges of lockdown and seeks a better set of defenses for the future. Achieving these goals brings business benefits while meeting the demands of today’s customers. This serves as a vital evolutionary change as the world adapts to a post-pandemic era.
14 | Issue 38
CORPORATE IDENTITY THEFT: WHAT IT IS & HOW TO PREVENT IT As digital acceleration creates an environment susceptible for identity fraud, how will you adapt? NICE Actimize IFM-X: The First Line of Defense Against Fraud Learn More
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FINANCE
What’s next for Payments? The rapid evolution of payments continues to grow. Consumer behaviour and expectations are seeing their biggest shift in a decade, fueled by the pandemic, digital payment methods and mobile wallets. These developments bring with them innovation and opportunity, but they also create their own unique challenges for businesses. We reflect on how these challenges will likely manifest over the course of the year, and what the payment landscape could look like beyond 2022. Pick-and-mix payments as standard The pandemic heightened customer expectations for payments, accelerating the thirst for an expanded suite of payment methods. Buy-nowpay-later (BNPL) and digital wallets, to name two, have exploded. Instant payments and e-money payments will account for more than 25% of global non-cash transactions by 2025, with cards continuing to stagnate, and cash further diminishing. To meet shopper expectations, more existing payment providers are partnering with BNPL providers (e.g., Square with Afterpay). Brands themselves also transforming
16 | Issue 38
payment schemes, offering additional local payment methods through a digital wallet, like Alipay+. Following current trends, 2022 will also see the rise of so-called super-apps, which offer a variety of services for shoppers, such as those unveiled in recent months by PayPal and Klarna. By the end of this year, e-commerce merchants who have not embraced a blend of expanded digital payments will be left behind, as this becomes the base standard. Next year, differentiation and growth will result from the exploration and adoption of next-generation payments, including invisible, biometric, and cryptocurrency methods that will rapidly gain traction. Digital currency: playing the long game Cryptocurrency is already entering the ecommerce industry, but the challenge of volatility remains, which will slow customer adoption. Providers must decide when the right moment is to step in and support it. There’s no definitive answer to this yet, however in the next 12 months, providers should begin preparing for the digital currencies in terms of infrastructure and process readiness.
We’re also seeing Central Bank Digital Currency (CBDC) emerging globally, which could open a new chapter in the current payments landscape over the next year. While it will be seen as more mainstream and trustworthy than other digital currencies, broader political context may hinder its progression, so it’s a case of ‘watch this space’. Responding to evolving compliance, regulation, and cybersecurity challenges The change from a cash-based economy to a digital payment ecosystem forces the industry to protect sensitive data and mitigate cyber risks. Over the next year, this means providers must reinvest in automation and advanced analytics to build consumer confidence for online payments. Similarly, B2B payments becoming a top priority means ecommerce providers must demonstrate rigorous compliance and security. The popularity of contactless payments has also prompted the need for a robust digital identity infrastructure in the payment industry. Across the world, governments are launching
FINANCE
national identify initiatives, and local providers are introducing solutions. Alongside innovations in open banking this will present cybersecurity challenges. Shared and integrated digital I.D schemes that facilitate payment authentication systems which customers can access anytime, anywhere, and on any device, will open incredible opportunities. It also means security must be watertight. An evolving payment landscape inevitably heralds regulatory evolution. In the next year, expect to see more local regulatory changes like that of India central bank’s tightened regulation around data storage and recurring payments. We are expecting more regulatory changes in the UK, particularly around safeguarding customer funds and customer communications, as well as anti-money laundering controls and governance practices. In addition, there will be changes to buy now, pay later (BNPL) solutions, which are now being used widely. Where payments are missed, consumers could end up paying penalties or high interest rates. The FCA has recently finalised changes to guidance on safeguarding, and firms will need to ensure they
adhere to this. And, with BNPL gaining even further traction, new protections for consumers and compliance requirements for processors will be introduced by regulators around the globe, especially in Europe and Australia. The next step It goes without saying that providers and brands need to be on top of any regulatory shifts and technological changes as the payment industry becomes ever-more complicated. As a result, the number of brands outsourcing global compliance solutions will continue to rise. From data privacy laws and export rules to tax compliance, crypto to automation, payments will continue to be one of the most complex obstacles vendors face. Increasingly, e-commerce merchants will be looking for expert partners to help them navigate the complexity.
Ron de Bos Director Product Management – Payments Digital River
Issue 38 | 17
BANKING
How does Banking-as-a-Service create opportunity for global businesses? Ever since open banking first emerged in 2018, increasingly companies are investing in incorporating financial products and services into their core business models. In fact, in 2022 UK open banking users reached 5 million.
By enabling organisations to utilise banking capabilities, they can behave much like a bank on behalf of their customers to remove elements of friction from the payment journey and enhance the customer experience.
To meet this rising demand for embedded finance which piggybacks the trend, traditional financial institutions and challengers alike are increasingly offering Banking-as-aService (BaaS) options. According to Allied Market Research, the global BaaS market is expected to grow to $11.34 billion by 2030, increasing at a CAGR of 17.1% from 2021 to 2030. Further to gains in customer experience and business growth, how will BaaS unlock the future of the financial services industry?
Businesses know their customers and understand their needs. So why not demonstrate that in the payment process? In doing so, business customers can reduce fears over identity fraud, stay on top of their spending and save time in the process - even when trading across borders, rather than dealing with bank licensing in a new market.
Putting customers front and centre The biggest challenge facing any new fintech or payment method is trust. The whole industry is facing a battle with fraud, and even the solutions that aim to combat it are being met with scepticism. We are constantly being bombarded from our banks via TV, online banking and on our apps to be suspicious of anything that doesn’t seem like “normal” banking activity. While BaaS has been around for a few years, it’s still a fairly new concept which has yet to be widely adopted. Despite this, some businesses have found great success with BaaS solution integrations. How? BaaS is a simple principle that puts the focus on the individual consumer.
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better, full stack financial services, from payments to FX and expense management can be easily embedded into apps, websites and platforms for convenience, greater efficiency, and further reduce friction for the end user and businesses. With these capabilities in their online armoury, companies can offer services directly to consumers or other businesses without redirecting them to a third party. Furthermore, with a suitable payments platform, businesses which are considering integrating BaaS solutions need only enable modules that they know they will need to build the propositions they envision.
Drive new value for businesses Competition is great for the customer, but puts all businesses on the treadmill towards the best possible service. Co-opetition, the act of competing businesses collaborating together, between banks and financial services providers, specifically newer fintechs via open banking allows brands to make seamless payments processes their unique selling proposition (USP). Financial services are becoming easier for companies to embed into their own products and platforms. Embedded payments solutions are seamlessly hidden within everyday services enabling businesses to process payments and refunds between customers and merchants via their own apps. Most recently, countless retail financing options which allow customers to spread the cost of their purchases have become available directly through merchants too. Even
As embedded finance becomes more common, consumers and businesses will choose convenience and simplicity when selecting suppliers or brands. By picking and choosing the best solutions to meet their customers’ needs, businesses can open up new possibilities, unlock the hidden value within their brand and ultimately improve conversion rates at check out Ignite the stale financial services industry Financial services have allowed bureaucratic and expensive processes to impede trade for many years. Increasingly, however, companies are investing in incorporating financial products and services into their core business models which are disrupting the status quo. Whether it’s called BaaS, embedded payments or embedded finance, the ability to easily add payment solutions into existing offerings is the new kid on the block.
BANKING
BaaS represents a real, meaningful shift in the buy/sell dynamic of the finance industry because it allows businesses to eliminate the complicated process that was previously required to trade internationally. Getting licensed and establishing banking relationships all over the world is a long and arduous process that can add months, or even years for entry into a new market. BaaS solutions make financial infrastructure simpler and more seamless than has been possible before. In response, for the first time the finance industry is being forced to innovate and stay relevant, forging a vibrant breeding-ground for financial disruption. What will be the business impact of BaaS? Any savvy CFO wants to streamline their treasury operations as much as possible. Now, full stack end-toend platforms can attack efficiencies from all corners, not only payments, but also issuing, FX, expense management, or whatever the current market demands.
At the moment, open banking features unlock the opportunity to build customer trust amid an industry-wide battle with fraud. On the face of it, all novel solutions like open banking are under great scrutiny. To remedy caution while customers learn to adapt, solutions must demonstrate their value. BaaS solutions offer benefits in terms of cost, speed and ease of use from the first use. There will always be a new challenge around the corner, but the real hurdle will be getting businesses on-board. Once businesses integrate BaaS solutions into their core offerings and full-stack solutions, the benefits will become exponential!
James Butland VP of Financial Partnerships Airwallex
Issue 38 | 19
FINTECH
The Fintech Road to Carbon Neutrality Fintech companies have huge implications in the world on the global economy, and on global warming. Currently, the world is facing one of its greatest challenges yet, to prevent rising global temperatures, by reducing greenhouse gas (GHG) emissions. The fintech industry can be said to have been a direct cause of climate change, having helped finance fossil fuel plants, and in the excessive use of energy for crypto mining. So, some might say the industry has a responsibility to provide innovative technology to help reduce GHG emissions. Currently, this can be seen through their use of technology to help integrate renewables into power grids, analyse bank statements to demonstrate the CO2 emissions from people’s lifestyles, and use of artificial intelligence (AI) to check if financial firms are greenwashing. Fintech companies are helping others achieve net-zero emissions.
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But more can be done by the fintech industry to directly address their own emissions. Fintech companies have always endeavoured to aid other companies, even now they are focusing on which solutions they can provide to help others reduce carbon emissions. However, the fintech industry itself is the world’s fifth-largest emitter of GHGs. It is pivotal that the GHG emissions produced by Fintech companies do not increase, thus becoming carbon neutral is essential and should be happening now. Then plans should be made to become netzero carbon ASAP. The difference between carbon neutral and net-zero is often unnoticeable, but it is important to understand they are not the same thing (Carbon Neutral vs NZC). Carbon neutral is where fintech companies do not increase carbon emissions and then use offsets to reduce the baseline value. Whereas net-zero carbon decreases carbon emissions using strategies, then offset as a last resort to reduce emissions to zero.
This is achieved through techniques that the fintech industry specialise in. Methodical, structured, and quantified approaches that can optimise the use of resources to help lower energy bills, reduce waste and deliver true reductions in emissions. First of all, a baseline carbon footprint measurement is required to understand where the GHG emissions are primarily sourced from. This first step demonstrates your commitment to environmental responsibility. Often this is done by following international standards such as the Greenhouse Gas Protocol. The two largest Fintech companies now provide their carbon footprint annually. But only since 2019 has Visa measured and reported their entire emissions inventory. This has been the case for most companies as the focus has been on emissions from direct operations and electricity consumption (Scope 1 and 2). Now, Scope 3 is arguably the most important to measure as the emissions a company are responsible for, but are indirectly emitted, are often the largest emitter of the three
FINTECH
Aaron Yeardley Carbon Reduction Engineer Tunley Engineering
www.tunley-engineering.com
scopes. This includes the goods a company purchases right up to the disposal of products they sell. Yet often, Scope 3 emissions quantified by companies only include business travel. For example, Mastercard began publishing Scope 3 emissions from purchased goods, fuel-related activities, waste disposal, and employee commuting on top of business travel from 2018. So the two largest fintech companies now measure their entire carbon footprint annually, leading as an example for other companies to follow. Once a baseline has been reported, it is important to annually measure this again ensuring the GHG emissions do not increase further. Then commit to reducing emissions following accreditations such as the Science Based Targets initiative (SBTi), which will approve your reductions to ensure we limit global warming to 1.5°C. Strategies to reduce GHG emissions are difficult, but things worth doing are never easy. To begin, fintech companies should prioritise behavioural changes to help reduce
usage and waste disposal. Then, all fintech company-owned properties should be fitted with renewable energy sources, reducing GHG emissions from electricity and reducing reliance on the grid. Often fintech companies lease properties so full control over bills and maintenance is not possible. In this case, they should prioritise locations with green certifications and push landlords to implement environmentally friendly strategies to reduce GHG emissions. However, fintech companies' biggest hurdle will be from the use of data centres. They already use more than 2% of the world’s electricity and generate the same amount of emissions as the airline industry. Not only do data centres consume incredible amounts of energy, but they also go through computer hardware as technology is not designed to last. Consequently, the requirement for large amounts of energy and nonsustainable technology hinders each other as the energy creates heat, which has to be removed through cooling systems before the sensitive
IT equipment is destroyed. Creating an endless cycle of replacing equipment and dissipating heat. Thus, fintech companies have to be conscious of their use of data centres, choosing companies that have smaller power usage effectiveness. Or own their own data centre that is also an energy hub that produces, consumes and stores green energy. The strategies your fintech companies choose to become net-zero carbon depend entirely on understanding where each gram of CO2e is emitted from. This task will be no challenge for an industry as accomplished in the fields of quantification and technology as fintech is.
Issue 38 | 21
COVER STORY
How Arca Fondi SGR is Prioritising Digital Services and Sustainable Investment Opportunities Ugo Loeser is the CEO of Arca Fondi SGR, a mid-sized active asset management company based in Milan. Founded almost 40 years ago to serve the typical Italian saver with a basic understanding of finance and a low-risk propensity, Arca Fondi SGR specialises in long-term investing. Today, Arca manages mutual funds, pension funds and institutional accounts, reaching more than 100 banks and financial institutions and serving over 800,000 clients. Ugo recently told Wanda Rich, editor of Global Banking & Finance Review, about the strides Arca has made in ESG products such as Arca Oxygen Plus, innovative product creation, and tech advances that improve access to the services its clients need. How has Arca Fondi SGR developed over the years? Our solutions aim to produce a high return in the long run without making our customers put too much money at risk at any single moment. This strategy continues to pay off as our clients and their banks are very strongly tied to Arca and its products. Nowadays, we manage more than €35 billion in a wide range of funds as we continue to innovate in a few high-conviction themes. ESG (Environmental, Social and Governance) investing is now a priority for Arca Fondi SGR. Can you tell us about Arca Fondi SGR’s proprietary ESG Rating Model? We developed our own proprietary ESG scoring by using alternative data – for example, company surveys – to assign a rating to almost every company we invest in. With the assigned scores, we
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are able to determine whether each company has a good or bad ESG rating, and we commit to invest only in stocks that come from companies which rank in the top three ratings. Moreover, we apply the usual exclusion criteria, like staying out of dangerous, socially unequal and/or polluting businesses. Arca Fondi SGR is at the forefront of innovative product creation. Are there any products you are most proud of? Will you be launching any new products this year? We are proud to say that we still manage two of our funds that were created almost 40 years ago, in 1984 when Arca SGR was born. Nonetheless, we innovate every year when we see serious trends that can match our customers’ needs. For example, during the last few years our best success came by being among the first to create tax-exempt ‘PIR’ funds; as of now, we possess a 12% market share. Also, we innovate products and services linked to our award-winning open-ended pension fund, ‘Arca Previdenza,’ the first pension fund in Italy with more than €4.5 billion AUM. Lastly, we entered the ESG space with a few ‘Art. 9’ funds, the most successful of which so far has been Arca Oxygen Plus. Can you tell us about the Arca Oxygen Plus project? With Arca Oxygen Plus, we have coupled the offer of a balanced ESG (SFDR Art. 9) fund with the possibility of giving a tangible sign of the importance of moving resources towards strongly reducing CO2 emissions. The fund invests in companies which aim to reduce emissions, while Arca Fondi is planting around 12,000 new trees in
many Italian regions as a side part of the project. We invite our network banks and clients to these events so they can see how asset management is helping to transform our planet into a more sustainable one. How does Arca Fondi SGR use technology to enhance services and efficiency? In the past few years we have invested a lot of resources into technology, and this is starting to pay off. Digital access and services are our priority; our website, along with customers’ and distributors’ reserved areas, has recently been completely redesigned to offer a smooth, easy but also complete navigation experience. Customers can find what they need in a few clicks. New customers can learn how to invest and easily find a consultant within our banks’ network. All of the collected data is analysed and reported to adapt our communication to our customers’ needs. An additional important result is having significantly decreased the amount of paper at home and in branches of the banks that work with us. What are the key asset management trends you foresee for 2022? Unfortunately, it is very easy to identify the key challenges and trends for 2022: inflation, rates and geopolitical risk. All of a sudden, after a successful recovery from the 2020 pandemic crisis, asset managers must face some big challenges they have not had for a very long time. However, as always, I am sure we will protect our clients’ wealth and find investing opportunities, even in this complex scenario.
COVER STORY
Ugo Loeser CEO Arca Fondi SGR
Issue 37 | 23
BUSINESS
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BUSINESS
Creating Community Through Dining Experiences only connection but physical space. The INTUEAT Kitchen allows the chefs to use their creativity through curated food-centered events through popup experiences that bring the Denver community together.
Culture impacts us all, sometimes in ways we never imagined. Growing up on a cattle farm showed me the importance of hard work. At a young age, my parents integrated the key values that made up our family business. They taught me dedication and hard work and instilled a work ethic that inspired me to devote my life to the food and beverage industry.
So, what did we need? Two things: a way to provide chefs and restaurant workers with the opportunity to sharpen their skills and share their craft with diners and a method for diners to experience restaurant-level dining in their homes. This is where the INTUEAT vision was born.
I was born and raised in Brazil, which is the fifth-largest country globally, occupying half of the landmass of South America. The country and the people are among the most diverse globally, which is why most populations crave unity and community.
I pursued a career in the food and beverage industry by studying at Johnson & Wales, and during my time there, I met some of the most passionate, talented people I’ve ever known. And after tasting their creations, I would be hard-pressed to decide who would cook my proverbial last meal. But yet, before, during, and after the pandemic, I saw many struggling to find a way to turn their passion into a paycheck.
The dinner table has brought people together for centuries. The concept is not new, but the way we’re setting the table is changing with our evolving needs. We are celebrating these fantastic and unique chefs who make up our industry. We hope INTUEAT provides an environment with a powerful foundation built on inspiration, collaboration, and community. Bringing comradery back to the kitchen starts by supporting chefs, ensuring enough room for everyone to succeed, and highlighting their talent.
Many of us don’t have the luxury of covering the high overhead costs of starting a business—especially in the restaurant world that includes a kitchen, high-quality ingredients and tools, space for diners, and someone to figure out the rest of the logistics that lead to success. Denver is full of talented chefs that just need a way to bring their dishes to the public.
While my Brazilian culture inspires every step I make in the business world, the inspiration I experience around the table through the people, conversations, and within the carefully crafted dishes is what will make the food and beverage industry continue to thrive no matter what comes next.
Community has always played a role in my life as well as my family’s. My mother and her side of the family started a small-town restaurant which turned into an international franchise. I saw the ways that food touched people inside and outside the kitchen and how it brought people together. This is where my story starts. An Intuitive Path We’re all tired of talking about the pandemic and the “new normal,” but it’s worth mentioning that one of the hardest-hit industries has been those in the food and beverage industry. A booming restaurant relies on people being able to imbibe and consume frequently. But in 2020, social distancing made this nearly impossible. In the decades before, food delivery was primarily relegated to Chinese food on Christmas and pizza on Fridays. But that changed fast. McKinsey reports that the global food delivery market has nearly tripled since 2017, and in the United States, nearly doubled since COVID-19. I’ve always believed that the food and beverage industry has long been primed for a revolution of sorts, and we all know that innovation is the child of necessity.
A New Dinner Table Starting From Scratch
I first recognized the need for in-home dining when trying to plan an intimate proposal dinner for my then-girlfriend, now wife, in my apartment. At first, I started a small, on-demand catering company called Chef Connect, but after receiving a few specialty requests for in-home dinner parties, I saw a way to showcase and support the talented chefs in my network. From local families to professional athletes, the need continues to grow. The connection that an online platform can bring to diners and chefs is the missing piece. To truly support and amplify chefs to help them develop their own businesses and concepts, the platform needed to provide not
Leonardo De Aguiar CEO and Founder INTUEAT
Issue 38 | 25
BANKING
Why are banks scared of change? How digital banking is driving disruption in 2022 A cargo ship of luxury cars catching fire off the coast of Portugal leaves thousands of U.S. consumers with a hefty deposit sitting dormant. A semiconductor shortage makes it harder for consumers to replace the credit card in their wallet. And a global pandemic triggers unprecedented demand for digital banking services and unleashes a wave of fintech disruption. Our interconnected financial system means any action — whether it occurs on the other side of the world or on your living room couch — produces ripple effects that touch every part of the global economy and everything from legacy banks to fintech startups to cryptocurrencies.
This volatile environment put innovation at the intersection of necessity as banks adapted to historic demand for digital services and all of their conveniences. In fact, eight in 10 banked Americans now prefer to do digital banking via a mobile app or a website; among younger consumers, it’s nearly universal. Here are a few key trends in digital banking we’re keeping our eye on: •
As digital trends accelerate and disruptions emerge in the year ahead, financial services organizations are reacting to change in real time. That includes growing enthusiasm for novel payments methods, more widespread acceptance of decentralized currencies, or shifting consumer demand and expectations for their banking experience. In 2022, the big question is how major players in the banking industry adapt to emerging industry trends and what comes next, or whether they get lost in a reactionary cycle — fighting a constant struggle against change and falling one step behind their customers and competitors. 2022 Trends in Digital Banking The past two years have felt like a constant reaction cycle for financial services organizations forced to keep up with the pandemic and its broad impacts on the economy and consumer habits.
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•
•
Cryptocurrency goes corporate: There is undeniable enthusiasm and a high volume of investment in cryptocurrency and other decentralized finance (DeFi) systems, which offer open-source technology as an alternative to the world’s current financial system and its regulations. This year’s Super Bowl, dubbed the “Crypto Bowl,” featured several high-profile ads promoting cryptocurrencies to its broadest audience yet. Soon enough, that could be matched by substantial seed capital. Though few legacy banks currently invest in DeFi services, this year could see major organizations take their first steps into this space. Banks buy into BNPL: Buy now, pay later — once dismissed as “modern layaway” — has gained steam among consumers interested in its flexible, interest-free payments. In fact, nearly one-third of consumers now say they’ve used BNPL financing, according to McKinsey. Big banks will almost certainly jump on the trend, keen to avoid another “Venmo Moment” that would let fintech run the BNPL game on their own.
•
Wealth management isn’t just for the 1%: The ultra-wealthy and corporations aren’t the only ones with an appetite for investing. As technology makes investing tools and services more accessible, retail customers are more interested in wealth management; apps, neobanks and other fintech startups have filled the gap to this point. A recent McKinsey survey found a 40% increase in direct brokerage accounts since the start of 2020, totaling more than 25 million new accounts. Legacy banks are wellpositioned to offer services that democratize wealth management and financial health, leveraging existing customer relationships and troves of data on hand. The marketplace for banking services: More banks are opening up their systems to digital finance platforms and other third-party services, providing a marketplace for new offerings on top of banks’ existing infrastructure. For example, a bank could consolidate BNPL transactions under a single line of credit or connect a customer’s loan services organization to its own platform. These partnerships enable great transparency, better customer experiences and integrated services all under one roof. As these trends gain momentum, there’s no stopping their ripple effects.
Online is everywhere — meeting customers where they are At the center of each of these trends is customer experience and the ways in which it's evolving. Gone are the days when banks could roll out an app and call customer experience a day. Today’s customers
BANKING
are blending experiences — logging on to a website one minute and a mobile app the next, switching between their cellphone and laptop, talking to a chatbot for one task or video calling a representative for another. Customers expect an interconnected digital banking experience that meets all of their banking needs, whether it’s a simple money transfer, diving into crypto or starting an investment portfolio. So what can you do to meet them there? •
•
Personalize the omnichannel experience: Your services are only as good as the experience that underpins them. An app’s “anytime, anywhere” banking functionality is great for paying bills or updating information, but customers are likely to seek out human interaction for high-touch interactions, such as applying for a loan or receiving financial advice. To create a true omnichannel experience, you can start by understanding how customers are accessing services and then offer a range of channels that your customers can personalize to best suit their needs. Follow the youth and be responsive to their needs: It’s no secret that banks have a generational problem. More than half of Gen Z and millennial banking relationships are at risk, according to an Oracle study, with younger customers much more likely to switch to another bank than their older counterparts. Winning over younger generations will be key to acquiring and retaining customers, and your digital strategy should reflect their demand for integrated, seamless experiences.
•
Build trust with great transparency and accountability: Trust remains an important consideration for banking consumers of all ages. In particular, millennials and Gen Z customers rank trust as their No. 1 determining factor for choosing a long-term banking partner. Building trust can happen by integrating greater transparency and accountability into customer experiences, such as offering multiple channels for customers looking for answers to their questions, help with an issue, or to talk with a banker about their account.
The reality is we can’t predict everything that will unfold in 2022 and beyond. Will crypto come to compete with traditional currency? Will DeFi provide a safe, sustainable alternative to regulated markets? How will the metaverse take shape and how will it positively impact financial services? We can’t possibly know. Some organizations may choose to ignore these trends altogether, only to be caught off guard and left scrambling to catch up. But the organizations that are best prepared to adapt to the new landscape and capitalize on disruptions, whatever they may be, are those that actively embrace change instead of fighting it. Understanding that the traditional ROI’s do not apply in contextual banking. By doing so, your organization can not only react to change in today’s dynamic environment but start to drive it yourself.
Matt Williamson VP of Global Financial Services Mobiquity
Issue 38 | 27
BANKING
Tackling fraud: What you need to know about permissioned co-banking
The advent of open banking applications heralded a more FinTech-friendly, technologically enhanced financial ecosystem. But what do these APIs mean not only for the future of banking but also for future generations? In the open banking system, financial institutions’ data is made available to users in real-time via two kinds of services: Account Information Services and Payment Initiation Services. These empower bank account holders to engage in personal finance management more freely and connect banking institutions’ services and servers with those of third parties, facilitating multiple points of access to a user’s banking information and providing greater control over personal finances. Open banking is a critical tool in enabling safe and secure digital cobanking, whereby account holders, such as parents, can establish a permissioned connection between themselves and their dependents’ bank accounts to help manage their money. At a time when people are spending an increased amount of time and money online, this is even more important, especially given the vulnerabilities associated with certain kinds of dependents.
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Children and young people are spending more time online than ever before, and the attendant financial risks associated with that have been on the rise too. The rates of money muling, whereby a young person’s account details are used to launder money, have soared. According to recent reports, the number of 14 to 18-year-olds in the UK being used as money mules soared by 73% between 2017 and 2019, with more than 5,800 cases of financial criminal activity among young people in 2018 alone. Additionally, the US Federal Trade Commission data revealed that younger people report losing money to online fraud more often than older people (though their median loss is often lower). Banks have a duty of care towards vulnerable customers, the exercising of which is overseen by the regulators. However, more
needs to be done to ensure that young people have the appropriate levels of oversight and safeguarding mechanisms in place to prevent them from falling victim to money fraud. It is also essential that we improve the financial literacy of younger generations so that they are not only less vulnerable to digital financial crime and fraud, but also provide guard rails to inhibit potentially damaging financial acts. As the OECD notes, young people, in part due to the increased amount of time they spend online relative to older people, are more often exposed to digital short-term credit offers. Buy now pay later schemes target and are more likely to be used by people aged 18-24, and 64% of users often spend more than they normally would due to the arrangement.
BANKING
Of course, responsibility here doesn’t solely rest with the financial service providers. One major factor in determining the financial literacy of young people is their experiences with and involvement in making financial decisions during early developmental stages. Children that have discussions or are taught by parents and guardians how to make financial decisions early on perform better on financial literacy assessments later in life. Parents and guardians should include children in relevant money decisions to convey values, attitudes, knowledge, and behaviours about money prior to financial independence. And, working as an additional pillar of support, many banking brands are also trying to take steps to educate on these issues too. As money is increasingly digitised, cobanking will become an essential tool for parents and guardians teaching financial literacy. As an eKYC (Know Your Customer) provider, we are facilitating age-appropriate oversight of children’s finances through a data-driven process that verifies the relationship between parent and child. Through this, parents receive notifications from their child’s bank account so transactions in the linked account can be discussed and a parent can advise. These processes can be adapted as the child grows up.
TrustElevate leverages rigorous eKYC processes that banks conduct and augments those by verifying the asserted relationship between co-bankers. By doing so, these third parties are facilitating the digital financial inclusion of youth while affording appropriate levels of parental oversight to a similar degree that would be expected in offline contexts. The same process is applicable with other dependents such as an elderly parent and an adult child who is granted lasting power of attorney. Given the spate of new risks and harms that are arising in relation to emerging digital financial opportunities, it is important that all parties – parents, banks and tech – align to make the most of relevant technologies to offset harm and maximise the benefits of those emerging opportunities. It is possible to do all of this while enhancing convenience and building consumer trust, but it must be done in an inclusive and empowering way with trusted third parties. In turn, this will create a brighter future for the next generation and ensure the safety of those who are most vulnerable.
Dr Rachel O’Connell CEO TrustElevate
Aebha Curtis Senior Policy and Regulatory Affairs Specialist TrustElevate
Issue 38 | 29
BUSINESS
Leveraging Mobile Tech Key to Beating Retail’s Supply Chain Crisis To understand the impact of the global supply chain crisis on the retail industry, SOTI recently surveyed consumers across eight different countries, as part of its From Clicks to Ships: Navigating the Global Supply Chain Crisis 2022 Report. The findings showed that consumers have been forced to change their pre-pandemic shopping habits and as a result, retailers have had to change their strategies to reflect this shift in behaviour. The combination of the pandemic and global supply chain crisis revealed the cracks in retailers’ processes as the industry had to suddenly prepare for the repercussions. Shopping experiences are now very different, and consumers are left with low tolerance and decreasing loyalty to brands they once loved, due to unfulfilled needs and poor experiences. As a result, customers are now less reluctant to turn to alternative brands if their favourite retailer is unable to provide any of the critical elements in their shopping experience. It has been predicted that the supply chain crisis could last for many more months and even up to another two years. With 33% of shoppers trying a new retailer and 40% trying a new shopping method within the last two years, these instances will rise without immediate and suitable intervention. Identifying recurring pitfalls The effects of the global supply change crisis prompted by the pandemic cannot be entirely mitigated and consumers are experiencing the effects first-hand. Shoppers have increasingly become used to feeling unsatisfied and disappointed when they are left with empty baskets and undelivered items. In fact, 57% of global consumers say that they have recently experienced one or more items not being available or have had to go to different retailers to find items in stock and additionally one third say the items they wanted to purchase have not been available at all. Global supply issues have presented too many instances of lost packaging, slow delivery times, unprecise delivery time slots and complicated return processes. Yet consumers are unwilling to compromise on speed and availability and now demand seamless experiences with a brand, knowing that they can rely on them and that their purchase is in safe hands.
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The retail market we saw in 2021 will be very different to the one will encounter this year. Whether it be the conscious environmental impact or the inconvenient wait times of ordering from brands shipping products overseas, more than half of consumers (52% global/60% UK) have changed their habits, saying they are now less likely to order an item that requires shipping from overseas than they were a year ago. We are instead seeing a revolutionised way of thinking amongst consumers that we have never seen before, with them now considering an array of potential frustrations before hitting “buy”. To succeed in a rapidly evolving market, retailers must optimise every customer touchpoint and ensure that the right technology is in place to mitigate any instances of customer dissatisfaction. Growing in an ever-changing climate Although the rapid scaling up of consumer trends and behaviours is putting immense pressure on retailers to ‘get it right’, the solutions are already within many organisations’ grasp. There is already a great deal of potential locked up in organisations’ existing mobile technology and systems that can be used to achieve a great customer experience. Revamping existing devices and solutions that organisations are accustomed to, can unlock business intelligence so that organisations can be fully prepared and diagnose potential detrimental issues before they even come to light. The first step in rethinking go-to-market strategies and how to approach customer relationships is by having the right data to identify and understand changing and growing consumer preferences. Technology that has everything in one place ranging from handheld wearable barcode scanners to EPS-enabled tablets and data collecting apps will help respond to the constantly changing demands and give customers the right information at the right time to fulfil their purchase.
BUSINESS
By ensuring retailers have mobile-enabled operational intelligence, they will be able to diagnose and pre-empt problems quickly by getting full visibility on device performance. Many retailers are still not even aware of when downtime has occurred. As the supply chain catches up and issues are gradually resolved, supply and demand will undoubtedly begin to stabilise again. Regardless of these improvements, however, the brands that utilise mobile technology will already have their best foot forward and the ability/flexibility to provide a top-class customer experience, regardless of how a customer chooses to shop. As technology advances, it’s refreshing to see that consumers are open and welcoming to the changes. For example, SOTI research found that almost half (46% global/45% UK) said they would consider either autonomous vehicles to deliver larger packages to their home or another convenient location, or delivery drones to deliver small packages (43% global/39% UK), easing pressure on quick turnaround and demanding delivery slots on the industry.
Stefan Spendrup Vice President of Sales Northern and Western Europe SOTI
As seen in the early stages and throughout the pandemic, consumer behaviour changes regularly and demands fluctuate. Whilst the future of the retail environment may be uncertain, by providing their customers with choice and flexibility, retailers can prepare themselves now for all eventualities.
Issue 38 | 31
FINANCE
Ego, Culture and Learning: Three critical factors to an M&A deal
According to Bain M&A could account for 50% of revenue growth in banking and financial services in the years ahead, an increase from the already high 35% rate. As the M&A environment remains hot, traditional banks are facing increasing disruption from private equity firms and digital-native banks. Success of M&A deals often comes down to three areas in my experience; management of leadership egos, an ability to integrate at least two cultures together, and an ability to learn from past experience so investors understand the challenges an integration can bring. These challenges aren’t often taught at business school, so leaders have to quickly learn from experience to navigate through them. Manage egos to make integration work A well-developed ego is of course necessary to make a deal happen in the first place – it requires a big, brave, and bold personality. But to make the integration work that welldeveloped ego needs to be reined in. When it comes to determining future leadership roles, both sides jostle for position with the buy side working out the roles they want in the newly enlarged business. One CEO I worked with proudly declared ‘let’s get our retaliation in first, we won’t have anyone from that side on our Executive team’. So how do you best manage egos? Communications must be clear. I led a merger once where the CEO assured everyone it was a merger of equals, but then quickly changed language and behaviour to a takeover. If the intention is to take over a company, be clear on that from the beginning.
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Engage the acquired organisation with kindness and respect. Operating with kindness and respect leads to a culture of generosity in an organisation where people are willing to go the extra mile for each other. This can have a multiplier effect particularly now as workforces are more fragmented. Ensure the integration team remains independent. In your integration team you need people who don’t take ‘sides’ and will work objectively to get to the right answer. It’s worth spending time to hire smart people with the confidence to speak up and do the right thing. Getting them on board early and well before day one ensures you can plan accordingly. Rein in those who can’t keep their ego in check. When executives can’t put their egos in check, then it’s best to reassign these people to roles as far away from the integration action as possible.
Prioritise the integration of two or more cultures Most organisations are made up of a corporate culture and many subcultures often at a function, service, or geographic level, and sometimes even down to a team level. In a merger when you assume you’re bringing together two cultures it’s often significantly more than that - you’re bringing together people with very different sets of values, behaviours, leadership styles, mindsets, and policies. The integration challenge is winning the hearts and minds of all employees and giving them a compelling vision to buy into. To integrate multiple cultures together:•
Diagnose current cultures, including subcultures to understand the baseline you’re working from. Then define the future end state culture. Even if you’re adopting the buyers culture find one or two cultural characteristics from the organisation you’re acquiring.
FINANCE
•
Stabilise leadership roles. Settling leadership roles quickly to identify who can then help stabilise the rest of the organisation is an important step. It might also provide the opportunity to make changes in the leadership positions that aren’t necessarily related to the deal. In a context where change is already expected, there are opportunities to look at teams and departments who might be underperforming or could use a shakeup and position the move as part of the broader integration process.
•
Invest time in building great relationships with the organisation being acquired. This can pay dividends later on and will ensure the transition is seamless. Too often, leadership teams turn inwards, let their ego dominate and fail to build relationships with their new colleagues. The best integrations ensure the leadership teams of both organisations come together through the integration process to talk about joint objectives, make plans and start to work together.
•
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Get day one right. The first big milestone of any merger or acquisition is ‘day one’ and having in place a clear blueprint, that everybody agrees with, for how you are going to operate. Every detail is important and needs to be communicated and understood appropriately. Getting ‘day one’ right is an important step in creating momentum and credibility in the organisation, so it’s one worth really investing time and energy in.
Founder Seven Transformation
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Manage your reputation. Unfortunately, reputation is built on the last bad transaction that you’ve executed or failed to do. Really understand the acquirer’s ethos in terms of who they are and how do they work. Are they honest people with integrity? Is this an organisation that has a genuine culture? Of course, a lot of M&A is about EPS (earnings-per-share) growth and other tangible factors, but people and cultural factors are also critical.
•
Ask what an activist investor would focus on. If management is not open to a different perspective, it’s never a good thing. It’s best in the long run not to underestimate how inciteful an activist investor or outsider can be. They can often have an outside perspective and have visibility to a wider range of strategies being deployed across the market.
Find symbols of change to introduce new ways of working can help smooth the integration process. To support the implementation and adoption of the integration plan, it’s important to ensure that the integration is at the forefront of colleagues’ minds. The best way to do this is through a steady cadence of visible acts of change or “symbols of change.” These will introduce the new way of doing things – for example, sharing success stories, leadership being visible at key customer sites or co-creating a new vision, mission, and values together. Every conversation around the integration with both parties needs to demonstrate the new culture.
Learn from past experience In mergers and acquisitions, nothing quite beats past experience. Coupled with this there is often a sense of mystery and intrigue surrounding mergers and acquisitions which can lead people to throw everything they’ve learned out the window. Like any programme of change capturing lessons learned should be an on-going effort. This mindset should be strongly encouraged by the Integration Director from day one. By not learning from failures, we are inclined to repeat similar patterns. By not maximising on deal and integration successes, we potentially miss opportunities to implement good practices to successfully complete existing and future integration work. To best learn from past experience: •
Karen Thomas-Bland
Lay out the rationale. Determine why are we doing this, and how does it fit within our business and strategy going forward? Then it’s about setting out the steps of the integration because there’s always going to be disruption in the process, and it often comes from external forces like competitor moves or customer needs changing. Most importantly, make sure people are prepared, that they know their roles and what delivery is supposed to look like. Once you have that, more than half the battle is already won.
Whether the initial market reaction to a deal is positive or negative, leaders should maximise their efforts to explain a deal’s value to the board, to increase transparency in communications with investors, and to execute the integration correctly. Directors need to understand the value-creation thesis and how the company will pursue it and this needs to be communicated to investors with a realistic account of when value is realised and what it really takes to achieve it.
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2022
TECHNOLOGY
Making the most of telecommunications in the education sector
The modern classroom is more dynamic than ever, with the influx of new technologies in the last few years leading many schools, colleges and other education institutions to reimagine their learning environments to meet the needs of the modern digital learner. The Department for Education defines EdTech (Education Technology) as any technology that can be used to “support teaching and the effective day-to-day management of education institutions”. This includes “hardware, such as tablets and laptop computers”, but also “digital resources, software and services”. Since the pandemic, EdTech has transformed from a common perk to an absolute necessity for learning institutions across the country and continues to be the case even with schools now at full attendance. Communication is key The pandemic not only changed the way we live but also the way we communicate. After an almost overnight
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switch to home-based learning in March 2020, communications technology allowed teachers to conduct classes virtually. By using digital platforms, they prepared lesson plans, conducted assessments, and communicated with parents to ensure disruption remained minimal. And while a period of time has now passed since the return to in-person learning, we continue to witness significant growth in demand for platforms that support more equitable parent-teacher communication, and better communication internally within learning institutions – specifically in multi-academy trust environments where staff are working between and sharing resources across multiple sites. In fact, recent DfE data tells us that 75% of teachers saw improvements in their ability to work across sites as a result of implementing suitable EdTech solutions.
or when conducting parent’s evenings or pastural care, but many still use a separate telephone system for their reception switchboard. This is especially key given that BT will be switching off their Public Switched Telephone Networ0k (PSTN) in 2025, moving from traditional phone lines to faster, clearer Internet Protocol (IP) technologies instead. This has played a big part in the increase in demand for cloud-based telephone systems nationwide, and while this change is well-known about in the private sector, we still encounter a great many schools who don’t know about the PSTN switch-off, what it means for them, and what they should do. 2025 might still seem a way off, but waiting isn’t prudent.
But despite the fact most schools have solutions in place for remote working or teaching, we still see a lack of overall integration with communications. For example, a school might be using Microsoft Teams to conduct video calls either as part of SLT or Governor meetings,
There are some simple but important steps you can take right now to gain an understanding of what you have in place today, and ensure your school or college is prepared for an all-IP future. First off, speak to your telephone or ICT provider and find out what type of telephone system you
What should you do?
TECHNOLOGY have (specifically, is it an IP phone system). If the answer is ‘no’, then you want to ask when your telephone system contract is due to expire. This is important because we’ve seen a lot of instances where a provider will simply auto-renew the schools telephony contract on expiry, and that might not serve you well in terms of functionality, support for the longterm, and cost. And that last point is key, because what many schools don’t realise is they can often save money by moving to an IP-based phone system, on top of all the functionality and resilience benefits. There are many excellent ICT support services across the UK acting as dedicated outsourced IT providers for schools, and these services are vital as they enable teachers and their SLTs to get on with the important job of educating. But many of the UK’s learning institutions don’t have the necessary support in place, and the evidence is compelling, with around 22% of schools having no clear IT
strategy in place. It’s concerning that such a high proportion of schools will be using outdated, unreliable, and often expensive solutions, and don’t have the necessary support in place to make a change that will serve them far better. Building a bright future for EdTech Despite the ever-present financial challenges within maintained schools, and the significant minority who need better ICT strategy support, we’re bullish about the opportunities that exist for schools in harnessing technology to better support teachers, pupils, and parents. And in terms of telecommunications, there are a plethora of options out there for IPbased phone systems, which enables schools to find something that fits their needs, both in terms of features and cost. The key is not becoming entangled in existing, outdated solutions that don’t meet the needs of post-pandemic teaching and serve to swell costs at a time where budgets continue to be constrained.
Simon Blackwell CMO TelcoSwitch
Issue 38 | 37
FINTECH
How to encourage more women into fintech Women are massively underrepresented in the fintech industry, with less than 30 per cent of the UK’s fintech workforce being female (Deloitte). Education has a key role to play in encouraging more girls to take up STEM subjects at school and in further education and go on to pursue careers in the sector. The data unfortunately gets even worse when we look at the founders of fintech companies. The founders of companies selected in Forbes fintech 50 list are made up of 118 men and only six women – with women making up just over 5 per cent, this is a big concern. What’s more, of the UK FTSE 100 companies, only eight companies have a woman as CEO. I’ve outlined a series of steps that can be taken by educational authorities and the industry to increase the number of girls and women applying for STEM subjects and going on to launch their own fintech business. Fixing the problem at the source There is no more effective way to increase the number of females taking STEM subjects than to target them during their school and university years. Persistent images of males in the STEM subjects that are shown to students in their earliest years, creates a preconception that these subjects are gatekept by males. Greater representation of females’ needs to be addressed to show young students that they too can pursue STEM subjects during school and university and go on to pursue a career in fintech.
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Increasing access to fintech work experience opportunities Increasing access to opportunities in fintech through work experience, especially for young women, is crucial to ensuring the success of the UK economy. Every year there is an increase in the number of young women applying to undertake advanced and higher-level STEM apprenticeships (WISE Campaign), which is evident that there is a general demand for STEM careers. The government needs to address this by greatly increasing the number of apprenticeships available to everyone, and businesses could do a great deal more to provide work experience and exposure to careers in STEM and fintech. Champion female role models More needs to be done by schools,the government and the media to champion those women that are excelling in the fintech industry. Female fintech professionals should be invited into schools to talk to female students and show them, first-hand, why a career in fintech is so rewarding for women and why it is accessible for them. In the UK we make subject choices that can shape our career choices at a very young age so reducing gender biases that can affect these choices will really help.
Mentoring Research has shown that female mentors early in academia increase positive academic experiences and retention in STEM subjects in further education and in employment (PNAS). Female mentors will have faced obstacles that males may not have done It can be invaluable to be mentored by a person who has walked in the shoes you are likely to walk in, and by increasing the number of female mentors, STEM subjects can feel more welcoming and accessible to all through internships.
FINTECH
I have worked in manufacturing, technology, and in property and finance today as CEO and co-founder of CapitalRise. Throughout my life, I have regularly been the only woman in the room, starting from my days at Cambridge University where I found myself to be the only female fresher in my college studying Engineering . This continued into my career, where I would manage all male teams, from the factory floor to the board room. While I value my experiences in each role and I have always found being different an advantage rather than a disadvantage it can be daunting at times, I would have greatly appreciated to receive support from a female mentor, particularly early on in my career.
Final thoughts The challenge of achieving gender balance extends farther than the world of STEM. Whilst my experience has always been as a female in male dominated fields there are equally many fields that are far too heavily female dominated which can make them less appealing as careers for men. As parents, employers, and role models, it is our responsibility to show young people that any career is possible, regardless of gender, and equip them with the resources they need to pursue their passions and talents.
Uma Rajah CEO and Co-Founder CapitalRise
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BUSINESS
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BUSINESS
Why data democratisation is a gamechanger for business Every day, technology is advancing. It’s removing barriers to success, allowing the broader adoption of applications that were once too sophisticated for the everyday person. It’s placing the power of AI (artificial intelligence) into more hands, inching us increasingly closer to solving some of the world’s most pressing issues. At its core, technological advancements are fundamentally an act of democratisation, making specialised tasks and capabilities simpler, more affordable, and more accessible to all. By and large, this is exactly what should be happening in the world of data and analytics. The promise of BI (business intelligence), after all, was to enable everyone to make smarter, data-driven decisions. However, this promise has yet to be fully realised. Even though self-service analytics has placed reporting tools in the hands of business users, companies continue to rely heavily on specialists to interpret and contextualise charts and dashboards – and in many cases, to build them. The true act of democratising data analytics – to seamlessly deliver insights from data into the hands of all – is well within reach. There have been incredible advancements in automation and AI (artificial intelligence) that have generated real-life examples of what people are capable of when they have the power of data in their own hands. Driving better healthcare outcomes with data Imagine a more intelligent healthcare industry where doctors become data scientists, patient treatment is personalised, caregivers truly care, and patients are more than satisfied with their care. With analytics, this new era of health care is well within reach, with some innovative industry players already taking the lead.
The medical-tech company Ava, for instance, uses AI and IoT (internet of things) to help women become pregnant without intrusive techniques or treatments. Through its work in personalising medical care for women, Ava has helped 30,000 babies come into the world. We are literally seeing new life right in front of us, due to creative uses of analytics. Another company making improvements in health care is Res Consortium, a management consulting organisation that’s helping to bolster the performance of healthcare providers in the UK. The company is using infused (embedded) analytics in its software to inspire behavioural improvements and help the healthcare system be more efficient with budget and patient care. GeriMedica, a multi-disciplinary electronic medical record (EMR) company in The Netherlands that services the elderly care market, rolled out analytics not only to aid the billing and finance departments, but to help its practitioners improve the quality of care. The staggering volume of data that the healthcare industry creates presents a huge opportunity for analytics to find patterns and actionable insights, which can improve the lives of patients. As datasets grow and analytical questions become more challenging, healthcare teams will increasingly rely on the analytics embedded within their EMR systems and other software. However, just serving up insights won’t be enough. As analytics become more mainstream, users will want the power to dig into data themselves, perform ad hoc analyses, and design their own dashboards. With the right tools and training, even frontline users like doctors and nurses can be empowered to become builders, creating their own dashboards to answer the questions that matter most to them. Empowering insights for faster, smarter decision-making If democratising data analytics provides so many benefits as demonstrated in the healthcare industry, then why aren’t other companies and industries following suit? The answer is simple. Doing so requires a fundamental evolution in how analytics is approached in the first place.
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BUSINESS
Most companies today ask their knowledge workers to make datadriven decisions by first learning additional tools. These tools come in the form of standalone dashboards and self-service analytics apps, which despite improving on the days of submitting data requests to IT, still require training, upskilling, and sometimes enrolling in certification courses. Not only is this often ineffective, but it also takes too much time; time that knowledge workers don’t have to begin with. To truly democratise data analytics, knowledge workers must be empowered to make data-driven decisions without learning an entirely new discipline. The ideal scenario would be to have actionable insights extracted from data and then infused into workers’ existing workflows, apps, and devices, providing a natural flow to their decision making. Imagine a CRM that crunches data to automatically suggest which accounts to contact, a customer service platform that proactively identifies accounts likely to churn, or a retail app that detects shifts in purchasing trends and recommends changes in inventory. All of these examples empower knowledge workers to make smarter decisions faster. They no longer need to stop what they’re doing and dig through separate dashboards for insights. In short, insights from data are presented directly to them – not the other way around. Driving innovation with analytics It’s understandable that many people wonder if analytics will turn the population into optimisation robots who are controlled by the data. But the truth is precisely the opposite. Like other technologies, when analytics and insights from data are placed into the hands of all, everyone benefits. In fact, people have already
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begun using analytics in creative new ways like inventing entirely new products and services. According to Deloitte, 44% of UK executives say AI is helping them to widen their lead or leapfrog ahead of their competitors by automating tasks and driving better business decisions into the future. Even more, recent reports indicate that 70% of businesses will be using AI, and the majority (95%) of customer interactions will use some form of AIrelated functionality by 2030. Look at the UK’s pioneering recipebox company Gousto, for example. This company is providing households with convenient and easy-to-cook recipes to the tune of eight-million meals monthly, while reducing food waste. Independent builders merchant Huws Gray is a one-stop-shop for its customers, providing everything from below-ground drainage products to roofing materials. And Disciple, an industry leader in SaaS solutions for the creator economy, is helping its digital creators build unique and targeted app-based communities around their content outside of mainstream social media channels. Each of these companies provides a product and/or service made possible by powerful analytics made invisible to the everyday person. This is what’s possible when data analytics is democratised. These achievements didn’t come to light because of specialist reporting teams in IT or self-service BI tools delivered to business users. No, they came to fruition because everyday people have insights at their fingertips, enabling them to make smarter decisions. The future of analytics is now. It’s up to the most innovative companies to keep pushing forward and putting insights into the hands of everyone in a way that makes sense to them. In doing so, everyone will benefit in ways unimaginable.
Paul Scholey Vice President of International Sisense As Vice President of International Sales, Paul Scholey is responsible for growing the Sisense business in EMEA and APAC. He brings over 25 years of experience in the software industry, having previously worked in and led teams in consulting, presales, and sales. Paul has a track record of growing early stage and midsize software companies, with specialisation in building sales teams focused on accountability and value-based selling. Most recently, he was SVP of International at BlueJeans by Verizon. Prior to that, Paul held a variety of leadership positions at Oracle, Teradata, Pentaho and Business Objects.
FINANCE
Three reasons why virtual cards will take off in 2022 With the pandemic giving rise to an even more touchless, contactless economy, the plastic card has become even more critical in recent times. However, in the business travel industry, disruption is on its way in the form of virtual cards. Virtual cards are the digital-only, temporary twins of those that sit in our wallets and can still be used digitally with a pre-approved supplier. For business travel, companies can either provide the card number directly through the corporate travel booking system or users can download a dedicated mobile app. The result is a faster, easier, and more secure way of paying for business travel. The rise of contactless payments to an ubiquitous level during the pandemic has prompted many individuals and companies to ‘go cashless.’ Virtual cards are a logical next step in that journey, and for business travel, we expect to see an exponential increase in their use driven by several key trends. Travel budgets to be placed under the microscope The economic pressures created by COVID-19 have increased scrutiny on budgets in every department, and business travel is no exception. A Morgan Stanley survey of 140 travel managers revealed that more than half (52%) expect their 2022 travel budgets to be somewhere between 11-50% lower than in 2019.
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In this environment, corporate travel managers must demonstrate that travelers comply with company policies and that travel programs deliver the expected ROI. Virtual cards can be a highly effective way of promoting compliance with policies, gaining greater efficiencies and insight into travel spending. Companies using virtual cards enjoy centralised visibility of their spending, enabling improved budget control and quick access to actionable insights. This approach streamlines a corporate’s often- complex spend reporting, reconciliation, expense, and invoice management processes. Further, providing travelers with a digital one-time-use virtual credit card and sharing it directly with approved travel suppliers helps prevent fraud and streamline post-trip expense report processing.
Contac tle ss pay me nts have be c om e the norm, m a k ing it e a sie r f or trave lle rs to use v ir tua l c a rds f or a ll trave l- re la te d e x pe nse s – f rom the ride sha re s to a nd f rom the airpor t or m orning c of fe e s– m ak ing e x pe nse m a na ge m e nt m uc h le ss pa inf ul. Similarly, submitting individual expense claims can be eased through a dramatically simplified expense process at the end of a trip, with automatic expense reconciling of a hotel or flight against the employer’s virtual card. Employees can also link a physical card with a virtual card and sync all trip purchases with spend management platforms automatically.
User experience is everything Personal debt We now live in an era where an impeccable user experience is ultimately an expectation, not a desire. In this context, virtual cards offer clear benefits to the end-user both before, during and after a trip. Without the need to distribute cards physically, virtual cards can be provisioned to remote employees instantly, helping to make onboarding new employees even simpler.
Perhaps the biggest pain point for business travelers is accumulating personal debt for business expenses. Virtual cards address this directly, eliminating the need for business travelers to dip into their own pockets by ensuring the most significant spend categories on a trip are paid directly from employer to supplier.
FINANCE
Personal debt levels are unfortunately rising partly because of COVID-19. A study from LendingTree revealed 36% of US consumers went into debt in December 2021 by an average of $1,249. Employers must remain aware of this and work to alleviate the potential stresses of unwanted employee expenditure. Virtual cards offer a smooth, seamless, and fair solution, ensuring business travelers don’t suffer financially due to their trip. Given the benefits, we see virtual cards soaring in popularity as business travel continues to rebound. From improved budget visibility to user experience enhancements, virtual cards represent new, disruptive, and exciting development in how travelers pay for trips.
John Sturino Vice President of Product and Technology Egencia
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FINANCE
Preventing fraud amidst the Great Payments Disruption Over the last two years, the payments and banking industry has seen a global transformation, accelerated significantly due to the pandemic. Digital transformation is enabling companies to do business in new ways by creating an environment where people, systems and things are increasingly connected. However, the threat landscape for digital businesses is far outpacing the evolution of security management practices. Today more than ever, consumers are digitally connected in practically every aspect of their lives and it is becoming clear that they are expecting the same from their banks. A recent survey by Entrust, a trusted identity, payments and data protection organisation, discovered how this disruption has impacted consumer preferences and habits in the banking sector, and what implications these may hold for the future. Digital vs traditional banking Consumers clearly have an overwhelming preference for online banking, yet a significant concern about fraud remains at the forefront of consumers’ minds. Entrust found that 88% of consumers favour digital banking over traditional banking. However, 90% of consumers worry about digital banking fraud. According to the respondents, these concerns are not unwarranted as 42% of consumers had been notified of personal banking or credit fraud in the past year. Yet, as a result, 67% of consumers who have suffered fraud changed their bank in an attempt to avoid suffering this again. The exponential rise of fraud and data breaches means financial institutions will not only need to improve their security offerings, but also communicate with customers on how advanced technology helps to keep their accounts secure.
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Password practices to prevent fraud Requiring a password, plus one or more added credential, also known as multi-factor authentication (MFA), is a good way to prevent unauthorised account access. Many data breaches can be traced back to compromised passwords, with phishing scams being one of the most common attacks. Remote working has become common practice for many of us since the COVID-19 pandemic sent the world into lockdown, with many organisations in a hybrid workforce, according to data collected by Entrust. During this time, many were operating from unsecured locations, creating new risks of compromised data in the event of malware infections and phishing scams, poor password habits and mismanaged credentials. To protect themselves, individuals and organisations must be more vigilant and resilient to potential security threats. Frequent password resets, increased knowledge of security risks and implementing MFA are just a few examples of simple practices that significantly increase digital security and prevent incidents of fraud. Biometric solutions Banking is one of the only industries that has the potential to lead the way toward a digital-first future. For example, ID proofing technology that leverages consumer biometrics enables banks to provide self-service account opening options that can be done remotely on a mobile device from anywhere and at any time. Biometrics also authenticate customers’ identities from their devices by using facial recognition or thumbprint technology, allowing them to securely access their bank accounts. However, a highlight from the report suggests that consumers are unaware of the power that biometric solutions could
provide when it comes to account and payments protection. Only 43% of respondents trust fingerprint recognition to securely validate their payments and only 34% trust facial recognition. Biometric sign-ins have been part of mobile banking for some time, yet consumers seem to be slow at adopting these processes, perhaps due to a lack of understanding or education around the value they can offer and for banks to communicate the value of these added layers of security to prevent fraud. Not only do user biometric solutions offer a greater level of convenience for consumers, in comparison to more timeconsuming authenticators, but they also provide a much greater level of security than traditional authentication methods like passwords. As well, behavioural biometrics provide a risk-based approach that minimises user impact while protecting against even the most sophisticated threats to an organisation. In comparison to user biometrics, which analyse the physiological features of the user, behavioural biometrics analyse more nuanced characteristics of the user, such as their typing speed, patterns of navigation, and the level of pressure applied to the screen. While user biometrics can be seen as another authenticator, behavioural biometrics have the capability to differentiate a human user from a bot, and potentially one human from another, which will help to identify when someone has gained unlawful access to a user’s account. To further mitigate fraud, banks and financial institutions can ensure personal information is protected through tokenization. This is the process of obscuring personally identifiable information so that it can only be interpreted by systems or authorised users with the correct security key. In the context of payments, tokenization is used when a consumer makes a payment with their contactless card, generating
FINANCE
an encrypted token that will protect the customer’s payment information following the exchange by making it unreadable to anyone trying to access the information. The rise of digital currencies Payments using digital currencies such as Bitcoin and Ethereum are growing in popularity as they have become a legal form of payment in several countries. 52% of Entrust survey respondents said they would consider using digital currencies like Bitcoin, Ethereum or a Central Bank Digital Currency (CBDC) for payments. With this rise in crypto also came a rise in blockchain technology. Blockchain technology can offer fast payment processing, but more importantly, it can offer more enhanced security through end-to-end encryption which will more effectively shut out fraudulent attempts and unauthorised access.
So far, blockchain technology is mostly used as the underlying technology that such cryptocurrencies operate on. However, the technology’s capability of securely recording and transferring information has the potential for much broader applications beyond the world of cryptocurrency, such as making payments across borders, protecting medical records and securing personal identity. The world of banking and payments is continuously changing, but a key theme we are seeing is that consumers want options. Digital banking is growing in popularity but in terms of securing their accounts and preventing fraud, it is evident in the survey from Entrust that consumers want the freedom to choose how to secure their accounts, whether that be MFA, biometrics or traditional passwords. The priority here must be for consumers to educate themselves on the best practices to prevent fraud and for banks to communicate the value of these added layers of security to prevent fraud.
Jenn Markey Vice President of payments and identity product marketing Entrust
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TECHNOLOGY
Death and taxes—
why you won’t be able to escape one in the metaverse The metaverse—a parallel digital reality where users can navigate virtual worlds and engage with others—is the hottest topic in e-commerce right now. Some think it will revolutionise the way we shop forever, marrying the advantages of in-person and online shopping and unlocking new possibilities for how we buy and sell products (both physical and digital). All commerce is regulated, and it’s still unclear what that looks like in this ethereal space. How will purchases be taxed in a world with no borders? What kind of information will be collected and how will it be secured? How will we pay for goods and services? What novel questions have yet to be considered? It’s unclear how regulations will evolve in the metaverse, but current frameworks may very well hold some clues to the rules that will define this new, virtual environment. If Mark Zuckerberg’s vision for digital life becomes a reality, here are a few things you’ll need to know about doing business in the metaverse. Taxes will still be tied to a physical location Purchases are going to be taxed, and it’s likely that physical location is still going to dictate which taxing jurisdiction to apply to transactions. While fully virtual transactions may not tie directly to the physical world, a user’s physical location is the easiest way for governments to ensure that no purchase goes untaxed.
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Current regulations stipulate that the taxation of services is based on the location or habitual residence of the buyer, while the taxation of physical goods is based on the ship-to location or jurisdiction.
that involves building up the internal staff, incorporating new technology, or outsourcing to ensure proper compliance and risk protection, most companies will need to expand how they manage regulatory compliance.
No matter how tax regulations evolve, brands selling in the metaverse will need a way to ensure that appropriate taxes are collected. This means gathering sufficient information from the end consumer purchase and applying the right tax decision, so brands will need to be sure that they’re receiving accurate location information from customers. In the event of an audit, brands would be wise to keep a record of the baseline information used in the tax decision, as regulatory agencies will certainly be watching the metaverse with a keen eye.
With the added complexities and security concerns that come from selling in an uncharted digital environment, brands need to be sure that they fully understand their compliance obligations and are positioned to take the necessary steps to manage them. Businesses looking to outsource these responsibilities should consider a partner that enables secure transactions while ensuring that compliance and tax regulations are appropriately fulfilled.
Brands will n eed t o in ves t in complian ce Regulatory compliance is complex and challenging in the physical world, and it will be a critically important consideration for businesses entering the metaverse. New forms of customer interaction in the digital world are going to bring new categories of complexities, and businesses will need to be ready to comply with rapidly evolving requirements. For many companies, this likely means further investment in compliance as a part of their everyday operations. Whether
Paymen t s c o u ld lo o k ver y d i f fe re nt Those expecting the transactions in the metaverse to look like today’s online transactions could be in for a surprise. Payment methods will evolve, and things like tokens or cryptocurrencies could become preferred payment options. Brands will need to have the infrastructure to adapt quickly and accept the rapidly evolving payment types and virtual currencies customers will come to expect. P h ys ic a l b o rd er s a re s t ill g o i ng t o ma t t er The metaverse could open new doors to sell globally, and companies need to make sure they are ready for the
TECHNOLOGY
increased opportunities that doing business in the metaverse could generate. One thing that is certain: participation in the metaverse will expose global consumers to brands, products and services they may never have encountered in the physical world. No matter how expansive or realistic the metaverse will turn out to be, life is still lived in the physical world, and physical boundaries will continue to be a consideration for the cross-border sale of goods. Businesses without experience selling across international borders may not be prepared to comply with the requirements for cross-border trade, including export, taxes, duties, and tariffs. That means they’ll need support navigating complex regulations and ensuring that they can get the product to the end consumer as efficiently as possible. Businesses need to decide on a cross-border trade and tax strategy and understand the regulations, taxes, and duties that apply to their products in the import country. Customers will need to know whether there is an option to pre-pay import taxes or whether they will have to settle all taxes on delivery. They also appreciate transparency, so having no added surprises in the purchase journey is the best way to give them a good experience.
Const an t d a t a c o llec t io n ra is es n ew ques t io n s The metaverse will be an environment rife with personal and payment data, and that will inevitably capture the attention of cybercriminals as existing security protocols may be rendered useless in this new frontier. This problem will require investment in security protocols and the experts who can implement them to keep personal data safe. Personal privacy is another issue that arises from data collection. Interaction in a fully digital world will allow new categories of user data to be collected ubiquitously, opening new avenues for brands and marketers to reach customers. Physiological and behavioural data could be compiled, such as tracking where consumers’ eyes move, how long they linger in certain areas, and the digital spaces they visit. This could be unsettling for privacy-savvy consumers, and new regulations for consumer and data protection are likely to arise. The solution is transparency, although perhaps to a greater degree to what we often see in the current ecommerce realm. With more forms of personal data being collected in ways that consumers may not expect, metaverse companies will need to create appropriate customer disclosures, terms of service, and privacy policies to ensure users understand the terms related to any transaction they make in the virtual world.
P u t t in g it a ll t o g et h er It’s hard to say definitively what commerce in the metaverse will look like, but regulation in the physical world could be a sort of fossil evidence that points to future evolution. The metaverse will be secondary to the real world with novel legal questions, but regulations that have evolved from centuries of buying and selling won’t suddenly be ignored. While it may be the biggest leap to date in the continued evolution of e-commerce, even a fully digital world’s new rules will likely remain tethered to existing regulatory frameworks.
Jackie Kyle Director of strategy and corporate development Digital River
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TECHNOLOGY
Cybersecurity in the Financial Services Industry A growing number of financial institutions are migrating to the Cloud. According to Google Cloud research, 83% of financial industry executives said their organizations already used cloud technologies in some way. Despite this tremendous success, there’s a factor that is slowing down the process of cloud solutions growth. It’s a security concern as, nowadays, cybersecurity is a top priority in the financial services industry.
Key management systems (KMS) are another new security development. These entail the management of cryptographic keys in a cryptosystem. Cryptographic algorithms are used to generate keys, which are then encrypted and decrypted to supply the needed information securely, to achieve security in a system. Cloud key management refers to a service that is hosted on the cloud and allows users to handle symmetric and asymmetric cryptographic keys just like they would on-premises. A lot of innovation is happening from cybersecurity vendors that directly pertains to the utilization of the cloud – e.g., Bot Mitigation. These solutions apply automated, data-driven approaches to managing bots. The solution also applies behavioral analysis to detect anomalies in site-specific traffic, scoring every request on how different it is from the baseline.
There are a few challenges concerning the topic. First, there are no standards for cloud security postures, and this can make banks doubt whether their data is properly protected when stored or processed in the cloud. Second, there are no regulatory requirements to ease the compliance challenges banks may face while migrating to the cloud.
The most common source of financial sector problems is malicious or criminal attacks. Financial gain was the most common purpose in data breaches across all industries, according to Verizon's 2019 Data Breach Investigations Report, with 71% of breaches being financially motivated. The spread of data theft or infiltrating networks at unprecedented size and speed might destabilize the financial service world. Fortunately, there are steps and procedures organizations can take to defend their companies against cyberattacks.
That’s why cloud providers are building security in many significant ways. One of them is a cloud firewall, a security solution that filters out potentially dangerous network traffic. This cloud-based firewall delivery method is also known as firewallas-a-service (FWaaS). Traditional firewalls build a virtual barrier around an organization's internal network, while cloud-based firewalls form a virtual barrier surrounding cloud platforms, infrastructure, and applications. To protect data from DDoS attacks, providers are using DDoS Protection Services that offer a cloud-based defense, with the most accurate detection and fastest time to protection against today's most dynamic and constantly evolving DDoS threats. These cloud-based solutions are typically delivered as a software as a service (SaaS) offering and scale to provide complete protection, regardless of an organization’s size.
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TECHNOLOGY
An appropriate antimalware solution In the first quarter of 2021, phishing assaults were most prevalent in the financial sector. Phishing attacks in the banking industry grew by 22% in the first six months of 2021 compared to the same time in 2020. For the same time period, the number of attacks on financial apps climbed by 38%. Another threat is ransomware, which is a serious cyber threat to financial institutions. Ransomware criminals are attracted to the financial services business because of the valuable client information they have. Well-chosen software enables secure payments and accounts shared among third parties and affords greater flexibility in how money is managed at the company. Anti-ransomware solutions include using advanced mechanisms like monitoring popular ransomware activities to identify and stop these types of malware. Although security solutions are an important aspect of a layered defense, they are not a cureall for cyber threats. It is recommended to have a well-planned complement of cybersecurity instruments to supplement the "human aspect" of cybersecurity. Team awareness By arming employees with knowledge of phishing scams and ransomware red flags, financial institutions can hedge their bets and reduce risks because the most common source of security breaches is human mistakes. When it comes to effective cybersecurity practices for financial institutions, security awareness training courses are crucial to company's security. Know vulnerabilities and monitor the threats
Even if institutions merely run vulnerability checks on a regular basis, it's not difficult for opportunistic attackers to gain access. Most data breaches are furtive. To remain persistent, hackers will attempt to cover their tracks once they've gained access to the company’s network. They get access by phishing for login credentials and then utilizing a variety of complex strategies to hide their activity. Vulnerability management can be optimized by: • Smart prioritization: Fix what matters most, according to the company’s unique risk tolerance • Rapid and effective remediation management: Curate the best fix —be it a patch, configuration, or script, get the detailed step by step instructions, and send them to the right person
Alfredo Rubina Vice President of Financial Services SoftServe
A digital consulting and advisory firm that provides innovative technology solutions for some of today’s biggest brands.
• AI-driven automation: Turn a complex fixing process into a simple step-by-step workflow, then automate away all the tedious steps • Remediation analytics: Get the realtime visibility into the effectiveness and outcomes of the remediation campaigns And the last, but certainly not the least, is the implementation of a formal security framework The framework is a set of guidelines based on a basic pattern of cyber risk reduction. These guidelines give a mechanism for the financial industry to define a fundamental strategy, assess risks, develop complete security systems, and finally respond to hacker activity.
One of the most efficient strategies to limit companies’ attack surfaces is to address vulnerabilities. It must, however, be done on a regular basis and based on a vulnerability management workflow.
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