Fintech - Q2 2021

A Mediaplanet campaign focused on

Fintech

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“Innovative fintech solutions have transformed the way consumers manage their money.” ~ European FinTech Association (EFA)

Q2 2021 | A promotional supplement distributed on behalf of Mediaplanet, which takes sole responsibility for its content

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“There is no doubt that green finance is driving innovation in financial products.” ~ Fintech Circle

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IN THIS ISSUE

“The Kalifa Review has the potential for UK fintech to take centre stage.”

Building on the UK’s reputation as a fintech leader

Janine Hirt CEO, Innovate Finance

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The Kalifa Review brings a renewed focus on the importance of the fintech industry to the UK.

“The value of open banking comes from putting customers in control of their data.”

Julian David CEO, techUK

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“Pension dashboards will transform the experience of pension saving.”

Nigel Peaple Director Policy & Advocacy, PLSA

Page 10

@businessandindustryUK

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n many ways, fintech is the embodiment and culmination of the UK’s long-standing international leadership in technology, financial services and entrepreneurship.

The emergence of UK fintech sparked a deep wave of innovation across financial services, improving products and engagement for consumers and businesses throughout the country. From banking and borrowing to investing and insurance, we’ve seen a growing focus on placing the consumer back at the centre of the proposition.

The UK fintech ecosystem is world-leading, securing more than £4.1 billion of investment in 2020 alone, creating tens of thousands of jobs, and being home to eight of Europe’s 12 fintech unicorns. It must be recognised as a key pillar in global Britain’s soft and hard power as we look to re-establish our international identity after Brexit and COVID. Maintaining the UK’s competitive advantage The Kalifa Review, commissioned by HM Treasury last year, sought to ask the question “what more can we do to help UK fintech grow?” and set out a clear roadmap for the future. While acknowledging the proven strength of the UK innovation ecosystem, it makes clear that we must not rest on our laurels if we wish to maintain our global competitive advantage.

In the wake of the Kalifa Review, all eyes are now on UK fintech, both nationally and internationally. We are already seeing how the recommendations will help to positively focus the minds of the entire ecosystem, from industry, to government and to the regulators.

There is also a growing awareness that nurturing this industry can reap positive societal benefits, while still ensuring complete protection of the consumer, helped in part by fintech’s notable role in supporting the country through the COVID-19 crisis.

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Now is the time for us to work together to ensure firstly, that consumers understand and continue to truly benefit from these new technologies, and secondly, that the UK maintains the global leadership position in innovation.

Helping consumers benefit from fintech Now is the time for us to work together to ensure firstly, that consumers understand and continue to truly benefit from these new technologies, and secondly, that the UK maintains the global leadership position in innovation that it has worked so hard to achieve. Innovate Finance believes the delivery of the Kalifa Review recommendations are critical to the realisation of both of these goals.

We heard more about the Government’s ambition to support fintechs in their desire to grow and compete internationally in the Chancellor’s official response to the Review. It was also promising to hear plans from the Department of International Trade to create a set of new initiatives aimed at providing further advice to fintech looking to scale to new markets.

We look forward to continuing to work with industry, government, policy-makers and regulators to ensure the UK remains one of the best places in the world to build, grow and scale a fintech business, to the benefit of consumers across the country and beyond.

Contact information: uk.info@mediaplanet.com or +44 (0) 203 642 0737

WRITTEN BY

Janine Hirt CEO, Innovate Finance

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Project Manager: Lydia Butler lydia.butler@mediaplanet.com Business Development Manager: Josie Mason Managing Director: Alex Williams Head of Business Development: Ellie McGregor Head of Production: Kirsty Elliott Designer: Thomas Kent Freelance Designer: Lottie Fox-Jones Digital Manager: Harvey O’Donnell Paid Media Strategist: Jonni Asfaha Production Assistant: Henry Phillips All images supplied by Gettyimages, unless otherwise specified

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While progress has been made in improving cybersecurity across the ecosystem, the increased complexity, pace, scale and interdependence overwhelms current defences.

How your business can reduce cyber risk through education and training In 2020, the number of companies that were victims of ransomware grew seven-fold. According to cybersecurity company Trustwave, those types of attacks are now the most common security incident.

W WRITTEN BY David Shrier Associate Fellow, Saïd Business School, University of Oxford

Paid for by Saïd Business School

ith the onset of COVID-19, the majority of companies quickly pivoted to allow remote working. But distributed infrastructure and a decentralised workforce have added new vulnerabilities to company networks. It turns out that hackers like working from home as much as employees do.

Ransomware attacks run the gamut of targets.

ZDNet reports that they’ve overtaken credit card theft as the top form of cyber crime. Banks are more vulnerable than ever. Larger companies face long downtimes after being hit with a ransomware incident – often taking weeks to restore systems.

Ransomware attacks will continue to threaten companies and executives – with staggering implications for operations, critical systems and even long-term company valuations. What can organisations, especially banks, do to prevent this and reduce the business continuity risks that come with ransomware attacks?

Training changes everything Every business leader needs models and frameworks to be able to make sensible decisions. According to Wombat Security, an incremental investment in security training results in a median reduction in the annualised risk of phishing attacks by approximately 50% and a median annual return on investment of about five times.

In a recent report published by Accenture, the speed with which organisations find security breaches is faster for those who provide higher levels of training.

The best at training found 52% of security breaches in less than 24 hours, compared with only 32% of the rest. How long it takes to resolve a security breach is also an aspect of better training. For leaders who have received training, 65% of all security breaches are fixed within 15 days.

While progress has been made in improving cybersecurity across the ecosystem, the increased complexity, pace, scale and interdependence overwhelms current defences. Companies require new cybersecurity tools as well as an understanding of how to deploy these new solutions. Without interventions and education, it will be difficult for business leaders to maintain integrity and trust in the emerging technology on which future global growth depends.

Choosing the right education The ability to choose the right cyber security training will determine whether you will develop in your chosen direction and achieve your intended career goals. In addition to understanding the challenges and potential of cyber, the frameworks and vocabulary that enable strategic decision-making and the key competencies required to secure a cyberresilient future, business leaders must also learn how to work more collaboratively across business functions. It is also important to learn from real-world examples and current industry leaders who have direct experience dealing with ransomware concerns, maintaining business continuity after an attack and managing cyber-risk whilst embracing digital opportunity.

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Featuring global subject matter expert Sadie Creese, Professor of Cyber Security, Department of Computer Science, University of Oxford and guest experts from Mastercard, Deutsche Bank and Palo Alto Networks, the six-week, online Oxford Cyber Security for Business Leaders Programme addresses these criteria.

Delivered in collaboration between Saïd Business School, University of Oxford and Esme Learning Solutions, this programme effectively prepares leaders from all industries for the increasingly complex future of cyber security through a highly collaborative, hands on approach to online executive education.

To learn more visit esmelearning.com.

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How can Europe encourage fintech growth?

Over the past 10 years, innovative fintech solutions have transformed the way consumers manage their money, ushering in new, convenient, affordable and more transparent services to consumers globally.

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s the home to several global fintech companies, Europe has set out to harness the power of financial technology with its Digital Finance Strategy. But today, it is time for the EU to harmonise and update policies that act as barriers to fintech growth.

Remove digital-only barriers Financial rules that were written ten or even five years ago don’t reflect the new reality that nearly all financial services are now digital. This means digital-only providers face hurdles that traditional providers do not. The EU should take concrete action to remove these barriers and mainstream policies that enable digital services across Europe.

Fintechs still face barriers when serving consumers across the EU. Examples of operational barriers span from duplicative anti-money laundering requirements, to diverging Know Your Customer rules, IBAN discrimination and patchwork consumer protection rules (e.g. different rules for digitally displaying financial products).

Open Banking’s success has also been fettered by diverging standards across EU countries. A single, harmonised EU rulebook is the best way to make Europe competitive on the global stage and ensure consumers benefit.

Same activity, same risk, same rules The EU can lead the charge in rebuilding financial services. However, regulators can’t take a one-size-fits-all approach. The principle of same activity, same risk, same rules should apply. It’s crucial that risk assessments are made based on what risks fintech products actually present - rather than pulling them under existing regimes that may be proportionate for some, but not all.

Applying a cookie-cutter approach to regulation will generate barriers to entry and create companies based on an identical model when consumers benefit from diversity in products and services.

The EU’s regulatory approach should acknowledge this variation and respond in a robust, proportionate manner.

The EU has the right goal in sight with its Digital Finance Strategy. Now it needs to take bold policy actions to make Europe the heart of digital finance - only then will its 450 million consumers reap the benefits.

WRITTEN BY Marc Roberts Board Member of the European FinTech Association (EFA), on behalf of Raisin

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WRITTEN BY Brigit Caroll Board Member of the European FinTech Association (EFA), on behalf of Wise

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Proactive regulation is key to robust UK fintech growth When it comes to fintech, it is critical to continue with a proactive regulatory environment in the UK which both protects the consumer and enables innovation to flourish.

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he UK has always led the way on forwardthinking, effective and proactive financial regulation. The FCA’s sandbox, allowing businesses to test innovative propositions in a safe environment, is a prime example, having now been replicated by numerous other countries around the world.

important to remember that many of these new entrants, new products and new technologies indeed serve to benefit individuals and SMEs by providing better access and experience, and making financial services overall more democratic and transparent.

Unlocking fintech’s true potential The effectiveness of fintech lenders in distributing Creating a strong regulatory environment the emergency COVID-19 loans, at speed and at scale, Against a backdrop of stiffening international demonstrated the power of the industry to support competition, the UK needs to press ahead small businesses and created a renewed focus on the to maintain its position as the pre-eminent role technology could play in increasing financial regulatory environment for fintech. The FCA’s wellness. This is just one of many examples showing recent announcement of a regulatory nursery how society is benefiting from the innovation taking was welcomed, as was the place in our financial services confirmed move towards industry. creating a “Scalebox”, a key The Kalifa Review recommendation of the highlighted the potential Kalifa Review, designed to for UK fintech to take The effectiveness of fintech lenders give more tailored regulatory centre stage. in distributing the emergency support for firms in the high Ultimately, we are all COVID-19 loans, at speed and at scale, growth stage. working towards the same Open finance, an area where demonstrated the power of the industry end goal: to ensure the the UK is world-leading, also UK retains its position as to support small businesses and created has the potential to unlock the pre-eminent global a renewed focus on the role technology huge product innovation hub for fintech and, more through shared data. It is a could play in increasing financial wellness. importantly, to ensure the key ingredient for providing consumer benefits from more tailored financial services to consumers and the great innovation currently transforming the giving them a much more accurate and detailed view financial services sector. The Kalifa Review puts of their finances. forward a clear vision for how industry, government, The concept of more tailored financial services and the regulators can work together to make leads to the broader issue of financial wellness, this a reality. which has become even more important as we seek to build back better and recover from the pandemic. A number of fintech companies have developed propositions aimed squarely at improving WRITTEN BY Janine Hirt financial health, including helping consumers CEO, Innovate Finance manage their cash flow and save more, or ensuring access to loans and cash flow for our SMEs, which is critical to the UK’s overall economic strength and prosperity. While regulation must put the protection of the consumer at the forefront, it is

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How BigTech is revolutionising the way we use banking services The relevance and importance of Open Banking is soaring. BigTech is now helping to catalyse innovation within the sector.

From the 2008 financial crisis, and further accelerated by COVID-19, customers are now more willing to give a chance to new players in the banking sector.

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pen Banking is the practice of sharing financial information electronically, securely and with customer consent.

Application programming interfaces (APIs) allow third-party providers (TPPs) to access financial information efficiently, promoting the development of new apps and services.

Ideally, Open Banking should result in a better experience for consumers.

With API usage doubling in 2020, in concert with a sharp increase in contactless payments and online banking following the COVID-19 pandemic, the streamlining of financial services has accelerated to a remarkable degree – and brought some much-needed resilience to the sector during a global crisis.

Open Banking: A wave of reinvention?

Banks have long held a privileged position of trust in society, safeguarding wealth and private information in the best interests of the consumer. Despite financial incentives and regulatory support to switch, almost 80% of consumers remain with traditional banks. From the 2008 financial crisis, and further accelerated by COVID-19, customers are now more willing to give a chance to new players in the banking sector.

Regulation is playing a role in this trend through the implementation of Open Banking, positioned as the catalyst for reinvention within the banking sector. Open Banking is a banking practice that provides third-party financial service providers open access to consumer banking, transaction and other financial data from banks and non-banks.

The aim of regulators in implementing Open Banking was to spur innovation by removing the substantial barrier to entry. This allows

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neo-banks and fintech organisations to enter the financial services market and compete alongside traditional banking institutions.

Technological takeover?

BigTech in banking Google, Amazon, Facebook, Apple and Microsoft dominate market share by leveraging their core offerings as multi-sided platforms for commerce and innovation. Alongside these BigTech giants, firms such as Uber, Netflix and AirBnB have enjoyed similar success by adopting platform business models, enabling them to capitalise on network effects to rapidly reach a tipping point at which they can dominate their markets. These innovation platforms continually expand their reach and functionality, creating an ever-greater lock-in of end users and discouraging the use of competing platforms which is enabling BigTech to expand their business models.

As banks are a 20th century platform model built around the current account from which additional services are bundled, creating consumer expectation for a one-stop finance shop, the industry is keeping an eye on the potential for BigTech to deploy platforms in the financial ecosystem.

Financial services are now offering BigTech the opportunity to further monetise their existing data stacks to create new and innovative banking products. BigTech’s acquisition of elements of the banks’ bundle could represent a path to market domination. With the regulatory landscape encouraging new entrants and banking customers favouring well-known brand names, it’s easy to imagine a future where BigTech plays an increasingly dominant role.

WRITTEN BY Pinar Ozcan Professor of Entrepreneurship and Innovation, Saïd Business School, University of Oxford

What’s next for Open Banking?

Regulators and policy makers must define the boundaries of data privacy and data usage across sectors in order to level the playing field between entrepreneurial innovators and established BigTech platforms entering the banking sector. Without these boundaries and regulations, the network effects created by access to cross-sector data (i.e. data network effects) will continue to increase the power of BigTech platforms in every sector, including banking.

Ultimately, the financial services industry is transforming into a tech industry at an unprecedented pace. With the platformification of banking and BigTech playing an increasingly dominant role, industry professionals are hard pressed to keep up with the changes and ahead of the opportunities.

The six-week, online Oxford Fintech Programme delivered in collaboration between Saïd Business School, University of Oxford and Esme Learning Solutions leverages insights from leading academics and industry professionals to explore these and other emerging fintech topics. The programme builds a future-facing picture of the banking sector in light of Open Banking and the rise of platform business models.

To learn more visit esmelearning.com.

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Fintech and the future of compliance The fintech industry is growing and is bringing with it new risks and challenges to the world of compliance.

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e are approaching a major shift in how technology and financial services interact; cryptocurrency, blockchain, AI and fintech are about to change the face of financial services forever.

Cryptocurrency and blockchain Cryptocurrency adoption levels are approaching 1% of the world’s population.

This sort of mainstream adoption is bringing us to a tipping point as consumer demand for the use of cryptocurrencies increases.

Financial service providers have the opportunity to harness this new technology to improve internal systems and processes. Blockchain technology adopted in-house can increase security and efficiency, create more efficient markets and help to combat fraud.

Artificial intelligence (AI) Within financial institutions there have been great advances in using AI technology to manage risk, automate numerous mundane processes and allow staff to focus on more complicated tasks better suited to the human mind.

Some parts of the industry will adopt these technologies successfully, while others may shy away or fail to adopt them. Ultimately consumers will be king in determining the success of any developments.

Fintech competition Customer service has never been more important for financial institutions. Fintech is now providing new opportunities to engage with customers digitally and to improve the customer experience.

A great example of this is how the onboarding and ‘Know Your Customer’ (KYC) process is changing – rather than taking five to seven days, we are seeing many banks carrying this out in a matter of minutes.

Internally there are opportunities for financial institutions to harness fintech; for example, to improve their systems to become quicker and more efficient, reporting and recordkeeping can be stronger with automated audit trails that meet regulatory requirements and better training can be offered, resulting in a higher skilled workforce.

How institutions adopt technology to better serve customers will dictate how successful they are in the future. New entrants, with lower operating costs and a head start on using technology, are seen by many as the future of banking. Also, by appealing to millennials and Generation Z, they are prepared to forge a path through existing institutions.

Fintech is the new frontier of banking and compliance.

Open finance for inclusion and innovation As the journey to digital transformation continues post-lockdown, it is crucial that financial services are secure and accessible to all. This is where Open Banking comes into play.

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he United Kingdom has been one of the mortgages, investments and pensions. leading countries in the implementation This evolution would enable the ecosystem, from of Open Banking which is a secure way to fintechs to banks and insurance providers, to fulfil the give financial services providers access to promise of Open Banking by developing even more financial information. It has innovative products and enabled the development services for all customers. of a vibrant ecosystem, with 226 third party An instrument for financial providers and around three inclusion The value of Open Banking comes million active users among Broadening the scope of from putting customers in control individuals and small and Open Banking would also medium businesses. lead to greater financial of their data and enabling them to Although open banking inclusion. share that data. has yet to deliver fully on We have seen an increased some of its promises, it has use of digital finance over the potential to provide big gains for customers. the last 16 months and as digital transformation Research indicates consumers could gain £12 billion a is progressively embraced by businesses and year thanks to its services, with businesses achieving individuals, we must not allow parts of the a further £6 billion in value. To reach those targets, community to be financially excluded. however, we need to go further and investigate the Extending the scope of Open Banking could boost best way to extend the scope of Open Banking. products and services aimed at addressing financial exclusion and allow everyone to have access to key Going beyond Open Banking financial services that will allow them to benefit in The value of Open Banking comes from putting their day-to-day life. customers in control of their data and enabling them to share that data. The more data they decide to share, Contact techUK’s Financial Services team to learn more. the better the services customers will receive.

However, the financial requirements of individuals and businesses go far beyond payment accounts data, which has been the focus so far in the United WRITTEN BY Kingdom and the European Union.

Julian David There is a logical pathway from Open Banking to CEO, techUK open finance that would lead to greater customer engagement. Open finance would extend Open Banking principles to give consumers and businesses more control over their financial data about savings,

WRITTEN BY

David Povey Content Development Manager, ICA

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Using technology to improve efficiency in logistics Improving operational efficiencies and reducing costs are two things that any business aims to do when looking to improve its bottom line.

“ INTERVIEW WITH Simon Hills CEO, Wise WRITTEN BY Kirsty Elliott

Paid for by Wise

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hether we like it or not, technology plays a massive role in all of our lives in ways that could never have even been imagined 20 or even 10 years ago” says Simon Hills, CEO of self-employment technology company, Wise, which helps logistics firms make these improvements through harnessing innovation. However, some logistics businesses are reluctant to use technology to improve processes - but why is this?

Improving efficiency through digital integration “Of course, the size of a company impacts how easy it is to integrate technology and digital solutions into a business.

Using software to cut back on the paperwork and admin hours needed for a business to operate is a universal way to improve efficiency and free up all-important time for your team.

“This room to improve efficiencies is particularly applicable within logistics, where we have worked closely with hundreds of businesses to understand the range of issues around engaging a large workforce of self-employed subcontractors.”

The new Wise platform is already being used by over 180 UK logistics firms to: • Reduce the time it takes to onboard by using the Wise app

to get all documents signed and ID uploaded digitally.

• Stay ahead of HMRC & customer audits with a complete overview of your subcontractor network.

• Push policy and contract updates to your subcontractor network through the app, and get them digitally re-signed.

Finding the business case “These key functions of the Wise platform are providing a clear competitive advantage to our clients who can save time, money and stress whilst improving the way they can engage with their self-employed drivers.

“Whilst there are a multitude of business reasons why harnessing technology may suit any individual company, it is important to look beyond the primary business benefits and towards how this may improve the way a brand can communicate with its self-employed workforce. If using technology means you’re able to communicate and work more effectively as a business, this is going to provide so many intangible benefits whilst increasing efficiency at the same time.”

Wise is currently used by over 180 UK logistics businesses and over 10,000 self-employed subcontractors to save time, money and stress. To find out how using Wise’s platform could benefit your business, head to withwise.com

How fintech is winning consumer trust

many other areas to serve broader and changing consumer lifestyles.

These include serving the expanding gig economy where workers have traditionally struggled to access financial products because of perceived job insecurity.

One example is insurance brand Zego, which provides insurance based on usage to drivers working for delivery companies such as Uber, Just Eat and Deliveroo.

Fintech has come a long way in the past 10 years and its involvement in our everyday lives has never been greater.

F INTERVIEW WITH Craig Fox Director of Fintech, Silicon Valley Bank WRITTEN BY Steve Hemsley

intech will become an even more important part of our daily lives as we see a wider adoption of banking as a service (BaaS) and more added-value initiatives such as embedded finance.

Innovation is fuelling fintech’s growth beyond traditional personal finance and Craig Fox, Director of Fintech at Silicon Valley Bank (SVB), says consumer attitudes towards finance and acceptance of fintech have improved over the last 10 years and will continue to do so.

He cites BaaS (the provision of complete banking processes from payment to credit as a service through API-driven platforms) as a game changer.

For example, BaaS is encouraging third-party brands to embed financial services such as loans and mortgages

into their own online businesses. This creates a competitive advantage by enhancing the customer experience and generating additional revenue.

It is also a way to retain customers and increase their lifetime value to the brand.

“BaaS means brands that are nonfinancial but trusted by consumers can offer financial products. The area of risk around regulation and compliance is handled by the banking partner,” says Fox. He cites some examples of big brands that already embed finance products, including Amazon, Apple, Shopify and transport app Lyft.

Gig economy opportunity SVB is a commercial bank which partners with innovators and investors, and Fox says fintech is evolving into

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Consumer friendly As customers have become more demanding, fintechs have carved out particular niches for different demographics.

The financial services app Cleo, for example, has helped more than four million people obtain a better understanding of their finances. It uses an AI assistant and is popular with younger people.

Another innovative fintech cited by Fox is venture-backed earned wage business Wagestream. The service is offered as an employee benefit and allows workers to access their money as it is earned throughout the month.

This means people avoid having to use other forms of credit including pay day lenders.

“Fintech is part of all our lives nowadays and the whole market has shifted,” says Fox. “The relationship between fintechs and traditional banks has matured too with many more partnerships being put in place.”

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For a better world - how fintech accelerates our transition into a low carbon economy All over the world, money is spent on green finance. It could mean investing in renewable energy or responsible waste management, lower green gas emissions or green lending which is lending, funds to sustainability projects.

W WRITTEN BY Susanne Chishti Founder and CEO, FINTECH Circle and Editor-in-Chief, The FINTECH Book Series

WRITTEN BY

Walter Moesenbacher FINTECH Circle Ambassador

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hile millennials seem to be the generation most interested in applying their ideals on environmental, social and governance (ESG) issues to their finances, Gen Xers and baby boomers are also expressing growing interest, according to the ESG Investor Sentiment Study* from Allianz Life Insurance Company of North America.

Nearly two-thirds (64%) of millennials said ESG issues are important in their investing decisions.

The increased focus on green finance or ESG is a new opportunity for fintechs. As in the past, fintechs transformed the way we live. Think of all the innovations from companies such as Revolut, Wise (previously called Transferwise), Klarna and the growing number of Challenger Banks, such as Starling Bank and N26.

Industry offering green solutions With their agile and innovative thinking - which is the DNA of fintechs - they are well placed to meet the changing demands of our global post-COVID-19 recovery. We see platforms that focus on ESG Investing, such as the UK’s Clim8 as a good example that only list companies with a clear manifesto to tackle climate change.

The British start-up CarbonChain offers carbon accounting products that create openings for industries to access green financing. The company Regal 38I8 works on a green blockchain to curb fraudulent activities enabling clients to invest in initiatives with a focus on sustainability.

The German start-up Tomorrow provides sustainable and transparent mobile banking services. Tomorrow Zero, for example is a premium account which enables the financing of specific climate change initiatives.

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New green fintech solutions We also see a lot of new green fintech solutions from carbon budgeting tools, incentive schemes, new technologies such as blockchain and AI. Fintechs can be enablers by analysing and responding to climate-related data.

Global financial institutions are also turning their attention to fintechs that focus on sustainability. Moody’s announced the acquisition of a minority stake in MioTech a provider of ESG data and analysis tools in China.

The increased focus on green finance or ESG is a new opportunity for fintechs. As in the past, fintechs transformed the way we live.

There is no doubt that green finance is driving innovation in financial products and services. Therefore, it is essential for the UK and Europe to be at the forefront. We predict that green finance will be one of the hottest trends of the global finance and fintech sector over the next decade and rightly so. Responsible fintechs are a powerful tool for green investing and help prevent “green washing” through increased transparency and accountability for all stakeholders.

Source: *ESG Investor Sentiment Study* - Bigger than the Environment New ESG Study | Allianz Life Find out more at FINTECHCircle.com

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How one fintech is taking on the banking giants Fintech and a disruptive market strategy allow smaller banks to challenge the banking giants and deliver better rates for customers.

D INTERVIEW WITH Mark Mullen, Co-founder and CEO, Atom bank WRITTEN BY Linda Whitney

oes a bank with no personal current accounts make sense? Yes – and it even means customers benefit, says Mark Mullen, co-founder and CEO of Atom bank.

Atom already broke the mould by being the UK’s first appbased bank, but while it offers savings accounts, business loans and mortgages, it offers no current accounts. Why? “Customers dislike paying for current accounts, but they are expensive to provide, so banks recoup the cost from higher interest rates on borrowing or poor savings rates.

So customers end up paying for them either way. When something appears to be free you know someone, likely you, is paying for it,” says Mullen. “The cost saving means we can afford to pay better interest on savings accounts.”

Mullen adds: “There’s no law that says you have to restrict your banking to one bank – you can have an account with us and a current account elsewhere.”

Disrupting the lending market The company is focused on targeting parts of the market ignored by other fintechs. “Others are competing on fees, but only 13% of the UK banks’ total 2020 revenues of £45 billion came from current account and credit card fees, which is less than £6 billion,” says Mullen.

The big five banks and Nationwide dominate the lending market, but they have legacy technology that is hard to change, says Mullen. “Our modern tech means we can afford to lend at better rates than theirs. Customers want a bank

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Mortgage lending is the single most profitable part of the loans market, but while some banks are leaving it, Atom are getting in. that pays the best rates on savings and charges as little as possible for loans. We pay 50 times the rate on instant access savings offered by HSBC.” Mortgage lending is the single most profitable part of the loans market, but while some banks are leaving it, Atom are getting in. It has lent nearly £3 billion in mortgages since its launch in 2014, with almost no defaults.

Staying ahead Couldn’t the big banks catch up? “It’s easy to create an app, but the back-office spaghetti that makes them work well is expensive and complex,” Mullen says.

“Fintech is designed to destroy the old universal banking model. Who says we cannot compete with the old Goliaths of the banking world? Don’t forget it was David that killed Goliath in the end.”

order to capitalise on the cost, risk, scale and resilience benefits that only the cloud brings.

Gone are the days of heavily customised, bespoke platforms with bi-annual release schedules and big-bang migrations. Today, mutualisation and streamlined, shared API-based functionality for the ‘benefit of all’ is the future of globalisation in payments.

The future of payments globalisation is on the cloud Looking ahead, banks will no longer run payment technology or host infrastructure. Mutualisation and shared API based functionality are the future of globalisation in payments.

T WRITTEN BY Mike Walters Chief Product Officer, Form3

he infrastructure of payments is now a battleground.

A battle to scale, a battle to ensure compliance and a battle of resilience against cybercrime. But financial institutions no longer need to enact these changes themselves and they don’t need to be managing infrastructure. They do, however, want to be able to move fast, scale fast and do so at low cost and low risk.

Changing the way banks think about platform Cloud native technology provides speed, scale, resilience and repeatability. The new building blocks for enabling rapid change and scaling for financial institutions are API’s,

Find out more at atombank.co.uk

microservices and containers. This shift in the way banks think about platform is growing, and the direction of travel is towards a mutualised payments environment.

Evidence shows that financial institutions (FI’s) are now happy to place mission critical processes onto a shared platform. Cloud-native technology is now proven at an industrial scale and confidence is high and growing.

Certainly in the UK, banks are now accelerating their payments modernisation programmes, partnering with specialist technology providers to move their payments infrastructure to a cloud platform model. Europe is now also poised to follow the UK and make the shift in

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Competing on a level playing field Cloud native technology enables rapid deployment in new territories as solutions can be designed and deployed very quickly with simple development required to meet local standards. To launch in a new country or region is dramatically simplified and becomes available to everyone in the eco-system, immediately.

The growth of digital and new initiatives like open banking means competition is fierce – both within consumer and corporate banking.

New entrants are disrupting the industry and bringing new digital offerings to the masses in quick form. They are unburdened from the legacy technology that plagues the incumbents and are able to grow very quickly in new markets.

Banks have size on their side, but size isn’t a guarantee of success. It is by modernising both the front and back-end infrastructure that will enable the level of business agility in order to complete on a level playing field with new challengers.

Paid for by Form3

Form3 is a payment technology provider and leading cloud native specialist in the payments space.

Find out more about how we can transform your core payments technology. bit.ly/3cI5X0V www.form3.tech

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Pension dashboards will clear the fog of uncertainty for savers How many of us really know what we have in our pension pots? Well, pensions dashboards will soon make it much easier to find out.

WRITTEN BY Nigel Peaple Director Policy & Advocacy, PLSA

What is a pensions dashboard?

Pension dashboards will transform the experience of pension saving by enabling savers to see the overall value of all their different pension entitlements, including the State Pension, online and in a single place.

On average people have over six jobs during the course of their lifetime and, thanks to the very successful policy of automatically enrolling most people into a workplace pension, with each employer they are likely to have a separate workplace pension. Not surprisingly, many people struggle to keep track of their pensions with the result that they often do not know how many pensions they have or much money they have saved.

That’s why the Pensions and Lifetime Savings Assoication (PLSA) is a firm supporter of pensions dashboards.

What challenges lie ahead?

The challenge ahead is the creation of the “financial plumbing” that will connect the many thousands of pension schemes in the UK with the pension saver. Following a project led by the pensions sector a few years

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ago, Guy Opperman, the Minister for Pensions and Financial Inclusion, has championed the project in Westminster and Whitehall.

Once the “financial plumbing” is established, it will be necessary to ensure that the data about everyone’s pension savings is accurate and comparable. This sounds like a straightforward task but currently pension schemes use different ways of estimating future pension income, depending on a wide variety of assumptions such as the investments chosen, how long people will live and how a person will draw their pension.

Fortunately, the Money and Pensions Services’ Pensions Dashboards Programme has a plan to iron out these sorts of issues. Currently, it looks like savers will be able to use dashboards from 2024 or 2025.

Next steps Towards the end of 2020, the Government took a Bill through Parliament which made it compulsory for all schemes to provide the pension information needed for savers to see their overall pension saving on pension dashboards. It

Once the “financial plumbing” is established, it will be necessary to ensure that the data about everyone’s pension savings is accurate and comparable. will be followed this year by detailed regulations.

Over the course of 2021, the Pensions Dashboard Programme will be working closely with its chosen suppliers to quickly begin building, integration and testing the digital architecture of dashboards.

In the meantime, pension schemes will be busy preparing their data and systems so that the majority will be ready to join the first pensions dashboards when they start to operate. Before we know it, pensions dashboard will propel retirement saving into the 21st century!

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The effectiveness of fintech lenders in distributing the emergency COVID-19 loans, at speed and at scale, demonstrated the power of the industry to support small businesses and created a renewed focus on the role technology could play in increasing financial wellness. ~ Janine Hirt, CEO, Innovate Finance

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This ad doesn’t want your interest.

But it does want your attention.

Do you have a credit card? 30-days interest-free and tons of loyalty points? Have you ever asked yourself who is paying for those perks? The unfortunate truth is, other less affluent users, revolving at 29% interest and paying all the hidden fees.

People should be using debit, and they are increasingly doing so. But sometimes credit is useful, like when you shop online. When I don’t want to pay everything in one go. When I don’t trust the retailer and don’t want to take on the risk. What if the product didn’t arrive? What if I returned it and the retailer held on to my money for weeks?

It’s not the benefits of credit that are wrong. It’s the fact that the old banks’ business model is broken at its core.

Revolving credit, overdrafts, hidden fees, predatory interest and payment protection insurance are just a few of their (dirty) tricks. Interest and fees amounted to a breathtaking £5.8 billion in 2020 in the UK alone.

With all the talk about sustainability, one has to ask, is this model really sustainable?

When I started Klarna 16 years ago, I set out to build a service that offers the benefits of credit but without the nasty side effects. You might have heard about it; it’s called: “buy now, pay later”. What you may not have heard, however, is that we do not charge consumers interest or fees. Instead, the retailers are funding it, saving UK consumers an estimated £76 million in credit card charges last year alone. It’s essentially a smarter, safer, fairer and more consumer-friendly alternative to credit cards.

Today, Klarna is a global bank trusted by 90 million users and 250,000 retailers. And we are dead-set on playing a big part in shaping the future of banking. A future where politicians set rules that both increase competition AND protect consumers. With this, we’re making a lot of people nervous though. After all, massive profits are at stake for the incumbents. First they ignore us, then they laugh at us, then they attack us, and then the consumer wins.

Intrigued? Follow our fight for better banking.

Sebastian Founder and CEO, Klarna

@KlarnaSeb Find out more at whypayinterest.com

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