Fintech - Q4 2021

Q4 2021 | A promotional supplement distributed on behalf of Mediaplanet, which takes sole responsibility for its content

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Fintech

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Technology... enables people to take control of the environmental impact of their pension investments. ~Adam Jackson, Director of Policy, Innovate Finance

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New investment in technology should be encouraged through direct investment. ~Julian David, CEO, techUK

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A new central bank digital currency – what do we need to consider?

UK consumers and businesses continue to vote with their wallets as they increasingly make digital payments. Coupled with the rise of cryptocurrency, the UK is thinking seriously about how it can support a digital economy.

T WRITTEN BY

Jana Mackintosh Managing Director of Payments and Innovation, UK Finance

he Bank of England (BoE) and HM Treasury are currently exploring a UK Central Bank Digital Currency (CBDC) through a joint taskforce. The introduction of a CBDC could be a seismic change in the way we use money. Vital steps are being taken by the BoE to engage industry leaders, technologists and academics to understand its potential impact. It’s exciting to be part of this work as we consider how new digital money could deliver better financial services for everyone in the UK.

realise the value of micropayments as a real-time way to pay for things. We should also consider what we can do to help CBDCs make our financial lives greener and more sustainable.

What do we need to consider?

Realising all the benefits will require technical development and change which will take time. If we want it to be successful, we will need to co-ordinate across the ecosystem with the industry, governments and consumers and ensure this new form of money will deliver value to users.

What is a retail CBDC? We also need to understand the impact it Not all cryptocurrencies are the same. If the CBDCs could allow faster, will have on our existing financial system BoE decided to issue it, a UK CBDC would how CBDCs will co-exist with other cheaper and more secure and be electronic money issued by the Bank, digital forms of money. The regulation of allowing electronic payments in the same a CBDC will need to be carefully calibrated transactions, as well as way we use banknotes and coins. with the ongoing regulation of other digital help digital inclusion. assets – such as cryptocurrencies and What are the benefits? stablecoins.

CBDCs could allow faster, cheaper and more secure If this system is to be used to make everyday payments, transactions, as well as help digital inclusion. Using CBDCs we will need to strike the right balance between introducing may also help combat illegal activity and fraud. However, the benefits of a CBDC without making it feel disruptive or some people are worried about loss of privacy and the use complicated for consumers. Many people across the globe of data. will be looking to the UK to see how the debate evolves The potential benefits of new digital money are vast. We here and how our society considers what it means to move could improve how we make cross-border payments and towards a modern, digital economy.

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As payment methods change, with increasing use of smartphones, contactless cards, mobile wallets and mobile banking, retailers can increase consumer choice by offering BNPL options and transfer the risk of late or non-payment to the BNPL provider.

Buy now pay later a new way to pay A growing number of consumers are switching away from credit cards to a buy-now-pay-later style of shopping.

H INTERVIEW WITH Nick Molnar Co-CEO and Co-founder, Clearpay

INTERVIEW WITH Anthony Eisen Co-CEO and Co-founder, Clearpay WRITTEN BY

Mark Nicholls

Find out more at clearpay.co.uk

aving seen the impact of the 2008 global financial crisis on their parents’ generation, millennials became more averse to financial risk. The result was a shift from credit to debit payments, according to industry expert and Clearpay co-founder, Nick Molnar.

Fast forward to 2020, as COVID-19 hit, this trend was exacerbated further with a strong shift toward e-commerce. As debit payments have become more popular with millennials and Gen Z, so has the use of BNPL – buy now, pay later.

Payment ecosystem Spending globally on BNPL has increased rapidly over the last two years, up +300%, while credit card purchases have flatlined.

That has seen a significant change in the payments ecosystem, with younger shoppers more wary of revolving debt and altering their spending and saving ethos.

Molnar, who is co-founder and co-CEO of BNPL specialists Clearpay with Anthony Eisen (known as Afterpay outside the UK and Europe), founded the company with a mission to create an economy where everyone wins through fairness and financial freedom. He explains how their product has made a significant impact on the financial and retail sector.

Inbuilt protections While still in the early stages of growth, it is powering a shift from a credit to a debit economy with more than 10 million people in the UK using BNPL services to buy online in 2020.

“As payment methods change, with increasing use of smartphones, contactless cards, mobile wallets and mobile banking, retailers can increase consumer choice by offering BNPL options and transfer the risk of late or non-payment to the BNPL provider,” Molnar adds.

Clearpay has extensive inbuilt protections that safeguard customers. They do not charge interest, late fees are capped and accounts are automatically paused if a single payment is late, so that customers cannot overspend or fall into a revolving debt trap. They have

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low initial spending limits, with higher limits only allowed after consistent on-time payment behaviour is demonstrated. Credit checks are not conducted so the customer’s credit score is not impacted.

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Sector regulation With proposals for regulation of the sector, Eisen believes the consultation paper from Her Majesty’s Treasury has “introduced some sensible measures that will go a long way to creating a proportionate regulatory framework for the industry.”

“Regulation of the sector will set a high benchmark for responsible practice in the industry and will create standards that ensure good consumer outcomes and deter bad actors,” Eisen says.

“However, there is still work to be done and it is crucial that new measures account for the varying forms of the BNPL industry.”

He says that consumers will be best served by products that have been designed with strong consumer safeguards within them.

Financial innovation As for the future, with millennial and Gen Z share of spend predicted to grow to 47% by 2030 across Australia, the UK and the US, Clearpay expects the market to grow with double digit expansion over the next few years and plans to move into purchase areas such as kitchen and home, athletic equipment, pets, travel and tickets. It has also recently launched an in store service with a number of high street brands in the UK.

Afterpay launched in Australia in 2014, and is available in the US, Canada and New Zealand. It launched as Clearpay in the UK in 2019 and in Europe earlier this year.

Clearpay allows shoppers to receive products immediately and pay in four instalments over six weeks, always interest-free.

It earns revenue through merchant fees, allowing it to offer a free service to customers who pay on time.

In return, merchants are paid upfront, with Clearpay taking on the risk.

Clearpay partners with more than 6,000 retailers and small businesses, including Pandora, The Fragrance Shop and Sweaty Betty.

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How fintech is saving the planet Securing finance for smaller companies A specialist finance platform is supporting small businesses by helping secure finance to help them thrive and survive.

S INTERVIEW WITH Guy Bridge CEO, Finpoint WRITTEN BY Mark Nicholls

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Find out more at finpoint.co.uk

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mall and medium sized companies (SMEs) can often find it difficult to acquire the financial support that will see them develop as enterprises.

Reasons such as credit status, lack of forecasts and detailed information on their broader financial position may be barriers to securing financial support for additional working capital, to invest in products, premises or infrastructure.

A number of organisations can help, but one finance platform, Finpoint, has proven adept at providing services for businesses looking for access to credit.

Accessing most suitable finance Former banker Guy Bridge heads up Finpoint, which endeavours to support SMEs, partnering them with lenders that can offer necessary funding for them to thrive and survive.

It is a regulated business and with its free platform, embracing technology in a transparent and seamless way gives SMEs as much choice as possible and helps them access finance. If a business has been declined credit by their existing bank or just needs help finding an alternative source, this is where the platform comes into its own.

The service helps SMEs refinance or raise debt finance – both secured or unsecured – with an array of finance types, including business loans, commercial mortgage or property development finance, asset or invoice finance, revolving credit facilities and structured funding requirements.

Customers tend to have turnovers under £25 million and can be of any corporate construct from limited companies and sole traders, to limited partnerships, so anyone can use the service.

Support through the process With only 5% of SMEs in the UK believed to have a finance specialist within the company, many do not have the expertise to present themselves in the best way to secure finance.

Finpoint helps SMEs present themselves with forecasts and financial information in a virtual data-room, with the platform’s technology matching them with appropriate lenders.

“It is all about planning and forecasting and we do a lot to support SMEs in that process,” says Bridge.

Companies seeking finance range from engineering firms, consulting businesses, manufacturers, corner shops and start-ups.

Finpoint is effectively a credit marketplace. With no minimum or maximum amount, the service is free to use and is the only finance platform used by the Federation of Small Businesses and their members and Better Business Finance.

Customers access the service either directly through the website or via one of the many partner relationships the company has. The platform has access to over 300 lending products and matches business customers with appropriate lenders.

Bringing technology and finance together unlocks the system-change needed to save the planet. This is a huge opportunity and responsibility for fintech, where the UK is a leading player.

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veryone must make fundamental changes to tackle the climate crisis: consumers and investors; businesses large and small; and financial institutions.

The money we all manage and spend needs to align with halving carbon emissions by 2030 and net zero by 2050. Money needs to be deployed on the basis of information and analysis.

Technology enables this by collating and assessing data and providing services that make this easier.

Carbon footprint of products Fourteen years ago, I led Tesco’s inaugural climate change programme, putting carbon labels on products. It took consultants months to map the carbon footprint of a carton of juice or a box of washing powder. Today, this happens almost instantly using artificial intelligence. Firms CoGo and Tink have collaborated to help banks like NatWest provide customers with carbon footprint data and advice about their spending, enabling real time decisions to reduce emissions.

Technology also enables people to take control of the environmental impact of their pension investments.

Platforms like Clim8 Invest enable exclusive investment in companies combating the climate crisis. In the business market, Funding Options has developed an online platform linking green small businesses to green finance. Fintechs like Eigen are using natural language processing to validate companies’ claims and guard against greenwash.

The next generation of regulations and services As future regulations develop, banks increasingly need to know how their borrowers align with climate targets and whether assets they lend against (e.g. homes) are at risk from climate risks such as flooding. Another UK fintech company, OakNorth, already

provides banks in the USA with cloud software which enables them to do so across their business lending.

The UK is well placed to be a global provider of net zero solutions.

Recently, I had the privilege of judging applicants for the ‘sustainability sandbox’ run by the Financial Conduct Authority and City of London to support and test new fintech products.

There was a huge number of high quality applicants, developing the next generation of services.

Realising the potential of fintech In order to fully realise the potential of fintech, we need three things: first, fintechs themselves have to make their businesses net zero, including reducing data centre energy usage and acting across their value chain from suppliers through to customers.

This is already happening as firms join the TechZero pledge.

Second, organisations must stop treating data in a proprietary manner.

Firms should identify what data they hold and offer collaborative, commercial terms to innovators to utilise it. Value will be created by connecting data, not hoarding it.

Third, collaboration is critical.

Solutions will come from looking across sectors and technologies, rewiring the connections in our economy.

Following the global financial crisis, fintechs met the needs of society and the economy, developing new approaches to financial services. Now, the fintech community is doing the same for the greatest challenge faced by humanity and we can all look to support their efforts to do much more, much faster.

WRITTEN BY Adam Jackson Director of Policy, Innovate Finance

Now, the fintech community is doing the same for the greatest challenge faced by humanity and we can all look to support their efforts to do much more, much faster.

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Improving decision making in response to news Diverse inputs drive better decisions The wide analysis of news reporting on a topic is broader and deeper than would be possible from the vantage point of a single news story. A press release may be the first indication an event has happened, but a more comprehensive understanding is provided from analysis of reporting on newswires, local newspapers and industry analysts. The breadth and depth of perspectives provide a more holistic view.

It is possible, using AI and machine learning to process hundreds of thousands of news articles a day, to tag thousands of subjects, industries, sub-industries and events within these stories. A story may be tagged as relating to ‘drug and device regulatory impact’, but it can also be tagged as relevant to ‘clinical trials’ or ‘recalls’.

Going a step further, a story tagged under ‘clinical trials’ could be subtagged ‘approval’, ‘initiation of a clinical trial’, ‘each phase of trials’, ‘failed’, ‘halted’ and a number of other trial nodes. This precision adds value to news by enriching the content with actionable signals to help users react to market-impacting events.

Decision makers need the best tools to help them make the most accurate, timely decisions in a world full of news. This requires historical knowledge and fresh perspectives using AI and machine learning.

INTERVIEW WITH Michael Salk Managing Director, Media Solutions and Data Distribution, Moody’s Analytics WRITTEN BY Sean Duke

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rtificial intelligence (AI) and machine learning technologies have developed greatly over the past two decades allowing data processing and enrichment to happen in an instant, at scale. As these technologies continue to evolve, capabilities are advancing in innovative ways to benefit decision makers. In news processing, these technologies are now facilitating the identification of new trends and topics as they appear in news reports. A recent example of an emerging trend came earlier this year, when NFT, non-fungible tokens, became a widely reported news topic.

Natural language processing engines, such as Moody’s Analytics NewsEdge NLP, are capable of identifying new terms early on as they are gaining momentum in news coverage, as was the case with NFT, then quickly adding these terms as a new topic of interest to assist users tracking these trends.

Through 20 years of news processing, the NewsEdge team has developed a

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stable, easily explainable, rich source of metadata which customers rely on to feed their own applications and models with minimal latency. AI and NLP capabilities are opening up possibilities to expand learnings and apply new models to news that inform decision making.

A hybrid qualitative-quantitative approach Moody’s Analytics has a long history of using data inputs to create predictive scores. This has been done, for example, using data sets such as bond prices to predict credit deterioration or improvement.

By applying the same discipline to news, NewsEdge NLP can identify event-based signals. It combines news feeds with the Moody’s Analytics Credit Sentiment Score (CSS) to provide early indications of credit deterioration. By compiling such adverse credit signals from the news, this helps firms assess credit in the loan origination and portfolio risk monitoring process and track unfavourable media.

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News is often the primary reason why the market moves, but it can also be the source of information on why the market is moving.

Allowing real time decision making Stories are categorised and tagged for topic, sentiment and event-based signals to allow real-time decision making in sub-seconds. The NLP engines are learning and getting better all the time and news content can be directly plugged into a customer’s decision models, even algorithmic trading models, which are dependent on realtime insights.

The NewsEdge NLP engine provides people with the option to tag their own content sources in a manner consistent with the content provided by the more than 19,000 news sources delivered via their feeds. News is often the primary reason why the market moves, but it can also be the source of information on why the market is moving.

In the future, market participants will look to mine news to inform their actions, and Moody’s Analytics will be there to help them achieve that. The firm plans to further invest in content tagging, natural language processing, machine learning tools, and its own team of news experts.

Find out more at NewsEdge.com

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Creating a true European market for financial services Europe is home to some of the most innovative fintech companies globally, but the highly fragmented regulatory landscape keeps it from realising its full potential.

T Technology can innovate pension saver engagement Technology continues to play an ever-increasing role in our lives; now it’s also helping us plan for our retirements.

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s the world moves forward, so must the pensions industry.

As an organisation, we recognise that, generally speaking, savers’ engagement with their pension is low. That is why we’ve been working on ways to improve peoples’ understanding of their pension pots and the options they have when they retire.

One way of doing this is through technology and the widespread adoption of our recently updated Retirement Living Standards.

Planning for your retirement The PLSA’s Retirement Living Standards - accessible to more than 14 million savers through more than 50 different organisations – are a practical and powerful tool used to empower savers to picture their retirement and engage more with their retirement planning needs.

The Standards describe the amount people are likely to spend in retirement, spread across three different levels of retirement expenditure. For single people it is Minimum (£11k), Moderate (£21k) and Comfortable (£34k). For couples it is Minimum (£17k), Moderate (£31k) and Comfortable (£50k) per annum.

They are an engaging tool when incorporated into regular communications such as annual benefit statements, but pension schemes are going a step further.

Exciting new technology is enabling providers to personalise the Retirement Living Standards so that they speak directly to individuals about their own savings journey.

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Technology can improve engagement and outcomes There are many examples of schemes incorporating the Retirement Living Standards into budgeting or retirement income forecasting calculators.

The best of these tools allows savers to dial up or down in specific areas of their spending – for example, by choosing not to run a car but spend more on holidays – to provide a highly tailored projection of much they will need to save by the time they retire.

Pushing the envelope of what is possible in engaging savers with their pensions, one major provider has incorporated personalised videos into their member communications.

This allows members to see personalised data animated on the screen and prompting them to consider further actions.

Some pension providers are even viewing the Retirement Living Standards as a benchmark for retirement outcomes, sparking a change in investment philosophy. By remodelling their default funds (the one most savers use) in the context of targets based on the living standards, providers believe they can better match outcomes with expectations.

WRITTEN BY Nigel Peaple Director of Policy and Advocacy Pension Life Time Saving Association

he European Union has the potential to lead the revolution towards tech-driven, fully digital financial services, providing users with new and innovative ways to manage their finances safely and securely. Home to several fintech companies that are active across borders, Europe is well equipped to challenge global competition - in theory.

WRITTEN BY Greta Schulte Contributing Member of the European Fintech Association on behalf of N26

Removing operational barriers is key The current regulatory framework across the European internal market has still not been harmonised adequately, hence creating a challenging environment for European fintech companies. Activities of today’s digital players are still largely governed by rules written in an analogue era for companies with brick and mortar branches whose businesses did not expand beyond national borders.

These regulatory standards significantly hamper fintech companies’ ability to scale up cross-border. Examples of the significant operational barriers companies in Europe are facing are duplicative anti-money laundering requirements, diverging Know Your Customer rules, ongoing IBAN discrimination and a patchwork of consumer protection rules.

In order for Europe to become a champion on a global scale, these operational barriers need to be removed in favour of harmonised regulation, based on the principle of “same activity, same risk, same rules”, rather than national regulators applying a “one size fits all” approach.

In order for Europe to become a champion on a global scale, these operational barriers need to be removed in favour of harmonised regulation.

The first steps have been taken The good news is that there are recent examples of the European Union taking positive steps to harmonise regulatory requirements.

The European Commission’s proposal on the review of the eIDAS regulation, as well as it’s recent efforts to establish a harmonised European framework to prevent money laundering and counter terrorist financing in the EU, are crucial first measures towards enabling a true internal market. They have the potential to remove barriers and allow for an interoperable environment for European fintech companies. However, more work needs to be done.

In order for 450 million Europeans and users worldwide to benefit from digital finance, playing catchup is not enough - bolder policy action is required. European fintech companies are ready to work together with regulators and the government to make Europe competitive on a global stage a reality.

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2022 is the year card payments expire: open banking is here Amazon’s decision to stop accepting Visa credit cards in the UK is more than a negotiation tactic, it is a sign that ecommerce has outgrown card payments.

In 2015, policy makers in the UK and Europe brought in open banking, creating a new pan-European payment method that is cheaper, faster and more secure than cards.

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mazon announced in November that it would stop taking payments from Visa credit cards issued in the UK, because of sky-high fees.

Interchange fees charged by card networks were capped under 2015 EU rules, but despite this many UK businesses have seen card costs stay the same or increase.

Things are worse since Brexit: it is estimated that UK merchants have shouldered £36.5 million in new card fees in 2021 (British Retail Consortium).

Many retailers feel they have little alternative but to put up with rising fees, which directly impact their revenues. The move by Amazon is the first by a major ecommerce business, but it is more than that. It is a sign that ecommerce has outgrown card payments – and it’s ready for change.

Card payments were designed for a physical world Card payments weren’t designed for digital commerce. They were invented in the 1950s by a businessman who forgot his wallet in a restaurant. And it shows.

Consider the last time you made a card payment online. Maybe you searched for your wallet. You probably had to type in your 16 digit card number, expiration date and CVV code – or accept risk by trusting a website to store them (there were £574 million of unauthorised card payments in the UK in 2020 according to UK Finance).

Perhaps you had to confirm your identity several times (because of new Strong Customer Authentication measures, implemented badly). If you were lucky, your payment didn’t fail (5-15% of card payments fail). How many of your online subscriptions have been paused because of cancelled or expired cards?

Mobile wallets like Apple Pay have papered over some of these cracks in payments experience, but they’re built on top of the same old, costly, complex card infrastructure.

WRITTEN BY Francesco Simoneschi Co-Founder and CEO, TrueLayer

Enter open banking payments In 2015, policy makers in the UK and Europe brought in open banking, creating a new pan-European payment method that is cheaper, faster and more secure than cards.

Open banking payments rolled out in the UK and Europe in 2018. They enable consumers to pay straight from their bank account at checkout, instead of a card. They involve fewer intermediaries, which minimises cost and friction. Payments settle instantly and authorisation rates are high. They are also incredibly safe since card details are not shared.

For customers, they’re easy to use - you just need a mobile phone and a bank account.

Refunds, a huge issue for retailers, have often been considered the Achilles heel of open banking, because they were not included as an original feature. But open banking providers like TrueLayer have changed this, making refunds as instant as the initial payment.

Set to become more commonplace Open banking payments have been quietly but rapidly growing in the UK. In October, 2.84 million successful payments were made, a five-fold increase from 2020. There are now four million open banking users – and it’s doubling every six months (Open Banking Implementation Entity).

You can top up your bank or investment account with open banking. You can buy and sell a car with open banking. You can even pay your tax – HMRC reported in September that £1 billion has been paid this way.

As consumers and businesses move on from the poor experience and high fees of cards, we’ll see open banking payments, or ‘instant bank transfers’ as they’re often called, appearing in more ecommerce checkouts.

It’s true that open banking is still evolving as a payment method – and we have some details to figure out. But it is the best opportunity the industry has to create a fair payments system for businesses, which delivers a better experience for customers.

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Find out more at truelayer.com/ payments

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Manage your business better with digital payments As consumers get used to paying for things digitally, businesses need to ensure they have the time - and cost-saving technology in place to benefit.

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usinesses need to acknowledge the acceleration of major shifts in payments behaviour during the pandemic and the move of consumers away from cash towards digital and instant payment options that saves them time and money.

The latest technology enables businesses large and small to process payments quickly, at low cost and with minimal administration.

The international payments market today remains expensive and inefficient for a significant proportion of users, with high barriers to entry for many businesses. However, everyone from a sole trader to a large corporate can now drive greater efficiency through payment technology to pay, hold and send money.

Business owners across the board are seeing greater adoption of digital payments in their personal lives and are realising that now is the time to bring this technology into their commercial environments.

There is an on-going education process within the payments industry to educate SME owners and also larger companies about how, even if they are already aware of digital payments, they can do things much more simply than they might perceive.

Fairer system Payment tech vendors are also helping to create a fairer system for smaller businesses who in the past have been treated less favourably than large corporates by the traditional high street banks.

At Paysend, our modular B2B platform provides a menu of services that businesses can choose from. They may require technology that enables them to take electronic payments from customers and get money into their bank account quickly, or they could be handling foreign currency if they have customers overseas.

Global coverage Paysend was set up in 2017 to help consumers manage their everyday finances.

It was the first fintech to introduce a global card to card transfer service and now offers businesses operating online more than 40 payment methods. It supports connections between 12 billion cards globally across Mastercard, Visa, China UnionPay and local card schemes.

Read more at paysend.com

INTERVIEW WITH Ronnie Millar Co-Founder and CEO, Paysend WRITTEN BY Steve Hemsley

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Unlocking green finance through innovative technologies Emerging technologies are essential to delivering green finance, enabling us to move towards net zero by 2050 and meet the USD 100 billion a year global commitment of climate finance.

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t COP26, industry and governments from across the globe discussed the way forward to boost climate finance - and indeed many positive statements were made. techUK welcomed the ambitious announcement from the Chancellor setting out the UK’s plans to become the world’s first net zero-aligned financial centre. Several other historic climate commitments from private companies covering USD 130 trillion of financial assets were also published.

COP26 was a key step in setting out new strategies and renewing commitments from both the private and public sectors. Crucially, public and private finance will need to be mobilised at scale to aid net zero and climate resilient growth and support emerging markets and developing economies.

Now, in order to move some of the new plans forward, government and industry need to collaborate and harness technology to deliver green finance for all.

Harnessing digital technologies will be key in empowering firms and public authorities to create new services, strategies and models that work to create projects focused on green finance.

Encouraging investment in digital technologies Harnessing digital technologies will be key in empowering firms and public authorities to create new services, strategies and models that work to create projects focused on green finance.

Innovation in financial services could accelerate the reassignment of capital to carbon-efficient assets, as well as unblocking new sources of climate finance, while also ensuring effective reporting under the new upcoming requirements.

To ensure the United Kingdom is at the forefront of these new developments and achieves the ambition set out by the Chancellor, new investment in technology should be encouraged through

direct investment. It should also be encouraged via the integration of sustainability elements into the existing vibrant fintech ecosystem. This can be achieved in various ways, such as by launching competitions, hackathons, incubators and accelerators that focus specifically on financing solutions related to sustainable business models.

Regtech: an area to explore Regtech can, and should, also be part of our investment strategy to develop green finance.

The overall objective of regtech is to improve transparency as well as consistency of regulatory processes. It is precisely this need for transparency and consistency that is driving both regulators and industry to adopt more comprehensive policies around ESG and climate-related risks to encourage companies to consider how they can better serve environmental and social well-being.

Effective regulation and governance are essential to driving these changes; however, it can be challenging for the firms themselves to implement them given the lack of consistency across jurisdictions and current gaps in data for assessment, monitoring and rating of ESG and climate risk. This is where regtech can help companies and public authorities stay agile and meet new climate and ESG related obligations.

As the digital world continues to evolve to protect the planet, techUK is committed to doing its part and supporting members in the journey to net zero. If you are using digital innovation to fight the climate crisis, join techUK’s members to help deliver a better future for our planet.

WRITTEN BY Julian David, CEO, techUK

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Data is influencing the future of fintech The COVID-19 pandemic has caused significant challenges and upheaval for many industries.

However, for the global fintech sector, it was the catalyst for dramatic growth.

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hanges in consumer banking and spending habits, as well as increased digitalisation among more traditional financial services institutions, have driven increased demand for the products and services offered by fintechs. With that, investment in global fintech reached a record USD 98 billion in the first half of 2021, up from USD 87.1 billion in H2 2020.

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Often thought to be more agile and innovative than traditional banking institutions, fintechs have reshaped how many consumers and businesses interact with financial services. In the UK, fintechs like Revolut, Starling and Monzo have become household names, with their entrance to the market influencing more digital services, encouraging a response from traditional players to even close high street branches to support this transition to online.

As more traditional banks begin to up their game when it comes to their digital offerings and competition within the fintech sector continues, to secure their future, fintechs must find ways to differentiate themselves. The key to this will be offering customers innovative applications.

However, to get to this point, fintechs must firstly address two significant IT challenges.

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Finding a competitive differentiator According to research from InterSystems, a leading provider of data technology, an overwhelming 81% of fintechs say data issues are their biggest technical challenge. This is broken down into two distinct issues, with 41% of fintechs globally currently struggling to leverage data for analytics, machine learning (ML), and artificial intelligence (AI), while 40% find it challenging to connect to customers’ applications and data systems (40%). With advanced technologies, like AI and ML, and real time, bi-directional data critical to developing new and innovative applications these challenges could have serious implications for fintechs wanting to get ahead and secure a greater share of the market.

Consequently, overcoming these data challenges should be high on the list of priorities for fintechs as they look ahead to the coming year. With data largely considered to be the lifeblood of any organisation, getting their data in order would allow fintechs not only to create more innovative solutions, but it would also allow them to capitalise on a variety of new initiatives, ranging from offering more personalised services tailored to individual customers to improving compliance with regulation.

WRITTEN BY Michael Hom Head of Financial Services Solutions, InterSystems

Addressing data challenges Encouragingly, investments in AI and ML, as well as data fabrics, a new architectural approach that accesses, transforms and harmonises data from multiple sources, on demand, are high on the agenda for the majority of fintechs.

InterSystems has been helping organisations both within and outside the financial services sector to address their critical data challenges for decades. InterSystems IRIS, with its advanced analytics capabilities, including embedded AI and ML, can help fintechs to resolve their data management and integration concerns. It can also undertake the data fabric initiatives needed to connect their data silos and gain a consistent, accurate, real-time view of their enterprise data assets. On top of this, it can empower fintechs to create the innovative, AI and ML-enabled applications, even if they don’t have access to data scientists that more traditional financial institutions struggle to provide.

Taking this approach and adopting next generation data platform technology will allow fintechs to connect to their customers’ wide range of applications and data systems and achieve that much-needed access to real time, bi-directional data.

In short, it will ultimately ensure fintechs are better placed to build on the momentum they have gained during the pandemic, rather than standing still. As competition within the market intensifies, this will allow fintechs to set their offering apart, continue to grow their customer base and demonstrate to both customers and banks the value of their proposition.

See how InterSystems IRIS is already transforming the fintech sector by visiting intersystems.com/fintech-research

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A new ethical Islamic financial institution has launched in the UK

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Ethical account options are finally being offered to customers who have specific needs and beliefs.

INTERVIEW WITH Shahid Amin CEO, Rizq WRITTEN BY Mark Nicholls

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ustomers have increasingly voiced their appetite to be able to open personal and business accounts in tune with their ethical values.

In addition, those with religious beliefs can also find financial facilities that sit in line with their faith.

Some financial institutions offer Islamic financial services compliant with the teachings of the Quran and other religious texts - and its practical application within developed Islamic economies.

Financial services With 3.5 million Muslims in the UK, and supportive Government initiatives, options for accounts that adhere to Shariah compliance are still surprisingly limited. However, a digital ethical and Islamic account experience called Rizq, accessed through mobile apps and web, is finally offering options to personal and business customers.

Shahid Amin, who has 20 years’ banking experience in the UK and Middle East and has spent the last 13 years in Islamic banking, recently joined the ethical financial services firm Rizq as CEO. “We offer digital financial services, payment transactions and account features that are in line with good citizenship,” he says. “We also have a Sharia compliance certificate which allows those of Islamic faith to be able to use our application with peace of mind.”

Good citizenship Rizq, which is regulated by the FCA, supports their target market, and the demographics within that range from students, to professionals, to expats, migrants and everyone inbetween. The neobank also offers commercial accounts to organisations with up to £50 million in turnover and under 50 employees. Amin stresses the services are open to people of all backgrounds and faiths with beliefs that are in line with the ethical values of Rizq.

“Ethical banking takes root in what positively contributes to society from a good citizenship perspective,” Shahid explains. “We encourage inclusivity, whilst restricting the use of our card in places like gambling sites and casinos, and the purchase of alcohol. We also do not allow our products and services to partake in adult entertainment.”

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Islamic banking Of the Muslim population in the UK, only about 80,000 currently use Islamic bank accounts, but the aim is to use technology to reach more customers from ethical and Islamic communities. From a small business perspective, there is almost nothing available that meets the needs of our customers. “We are now bringing this technology to them and making it easier to connect to the world of financial services,” adds Amin.

For the future the company aims to establish itself as a leading digital financial services provider in the UK, prioritising customer service and experience, with an eye on expanding to markets across Europe, Africa and the Middle East.

How to avoid failure whilst scaling in fintech Currently, the biggest fintech trend is to create the ultimate frictionless, coolest, fastest app and unregulated payment solution, but these are all wrong! Trust and getting the regulatory fundamentals rights are basic elements of success.

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lthough the change and will often use your service regulations around as a secondary solution. Often, when fintech give the the customer is onboarded, they are opportunity to move left alone with the seamless usage fast, you must get your and no effort is made to educate fundamentals in place them on usage. from day one. We see For example, the user’s salary keeps a lot of initiatives coming up with an flowing to their primary bank account, instant application and they forget to while they use your secondary solution include on their roadmap the impact for small transactions. Similar to social when they reach a certain scale. media – you want an active user base The loss of trust of your target instead of a high volume of ‘sleeping’ audience will be clients. Ideally insurmountable. when you onboard a Fintech is centred customer, you want to around people’s make them a ‘raving money, which is a fan’ and show them In the world of digital different hurdle from how they can use your payments, there is this belief service to increase the a generic product or that everyone is instantly service. People must usage. trust you with their tech savvy and is going to money. Trust is built Changing human use your solution regularly; on excellent customer behaviour service and credibility. this is a misconception.

Remember, human If you are a new player behaviour is to dislike in the industry, the credibility must change and the ultimate goal is to come from your fundamentals, getting gain their trust. Do you trust anyone that regulatory part right. There are with your money? Ask yourself this plenty of examples in the industry who question when you scale your solution. lost several clients in their growth path At the FINTECH Circle Scale Up due to these mistakes.

Program, we work with fintech firms to deeply understand their customer Understanding your audience needs and psychological profiles. The In the world of digital payments, indirect effect of this is that happy there is this belief that everyone is clients will talk about your service and instantly tech savvy and is going others will embrace your solution. to use your solution regularly; this is a misconception. Most don’t like

WRITTEN BY Susanne Chishti CEO, FINTECH Circle

WRITTEN BY Michael Boevink Head of Sales FINTECH Circle Scale Up Program

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I believe adoption of open banking will grow when customers realise the standards and protocols are in place to protect them — and they see the benefits it offers.

Open banking can give customers more flexibility – and save them money Open banking offers an innovative way for lenders to make better decisions about a person’s creditworthiness. That’s a win-win for financial services companies and their customers.

A INTERVIEW WITH Alex Marsh Head of UK, Klarna WRITTEN BY Tony Greenway

lex Marsh believes the UK could be on the cusp of a banking revolution.

The big high street banks have had it too easy for too long, he says, because their customers have traditionally found it too troublesome to move to other financial services providers. But open banking — and, ultimately, open finance — is going to change all that by freeing up the system, making it more transparent and giving customers more flexibility and choice.

Marsh, Head of UK at Klarna, a Swedish fintech which provides online buy now pay later (BNPL) services, points out that nearly four million people in the UK are currently using open banking — and in two ways. Firstly, by making open banking payments at online checkouts that send funds directly to merchants or service providers at the click of a button; and, secondly, by utilising a single app for a holistic view of their different bank accounts.

Yet Marsh thinks that there’s another important way for open banking to benefit consumers and financial services companies — and, as a bonus, encourage more people to use it. “One of the areas we are active in — and where we see a very strong future for open banking — is credit underwriting,” he explains. “This works when consumers consent to share their bank account information instantly and securely with other financial services companies.”

Instant visibility of up-to-date customer data is a ‘win-win’ Marsh notes that this type of instant data sharing is good for customers who have limited (or no) credit histories, but still need to demonstrate their financial health before lenders will grant them access to their services.

“Take those usually younger people who don’t have a mortgage or credit cards, haven’t built up credit scores and therefore struggle to get access to lower cost forms of credit,” he says. “They may have good incomes and be responsible spenders; but, without a credit file, they can be unfairly penalised by lenders and pushed into taking out high APR loans and credit cards.” However, with open banking, lenders have immediate visibility of their finances,

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and are therefore able to make quicker decisions about their credit applications.

This type of instant data sharing is also a boon for companies like Klarna, who have a social duty to lend responsibly, and addresses an important concern identified by the former CEO of the Financial Conduct Authority Chris Woolard, in his review into the unsecured credit market published in February 2021. “Plus, given our credit products are interest and fee free, there’s no financial incentive for us to offer our products to customers who we don’t believe will be able to repay us on time and in full,” says Marsh.

How ‘open banking’ will bloom into broader ‘open finance’ Lenders usually do this by obtaining information about potential borrowers from credit reference agencies (CRAs); although CRA data can be as much as four to six weeks old. On the other hand, open banking offers immediate visibility of an applicant’s financial data in real-time. That’s a game-changer.

“Analysing up-to-date financial information allows us to comprehensively assess a person’s suitability for our interest free services, which ultimately saves them money,” says Marsh. “That’s why I think open banking can be amazing.”

Still, he stresses that uptake of open banking (which is mandated by both UK and EU regulators) will only increase when consumers become confident that information is being shared in a secure way. “I believe adoption of open banking will grow when more and more consumers realise the standards and protocols are in place to protect them — and they experience personally or see from people around them the clear benefits it offers.”

Ultimately, Marsh expects open banking to develop into a wider open finance model, if the likes of mortgage providers and pension providers get on board. “Open finance offers much broader consumer benefits,” he says. “That’s because customers will be able to view their entire financial situation — bank accounts, credit, insurance, mortgages, pensions, etc — in one place, and move freely between the best value financial products and providers.”

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Tackling financial exclusion in the UK

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Leading fintech organisations are coming together to address the growing problem of financial exclusion in the UK.

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inancial exclusion is a growing problem in the UK with millions of people struggling with money. The situation has worsened during the pandemic with more individuals finding it harder to make ends meet and excluded from accessing financial services.

To highlight and address this, the fintech sector – which harnesses technology to advance financial services – is coming together through the “Finclusion 2021” campaign to encourage a culture of financial inclusion, driven

by Tech Nation’s Fintech Delivery Panel.

INTERVIEW WITH Victoria Roberts Director of Fintech Delivery Panel and Insurtech Board, Tech Nation

WRITTEN BY Mark Nicholls

Addressing financial exclusion Victoria Roberts is Director of the Fintech Delivery Panel at Tech Nation, the leading accelerator for scaling UK tech companies. She says: “Financial exclusion could happen to anybody. Factors that can drive being excluded from the financial system range from disability or being made redundant, through to the financial impacts of a cancer diagnosis, or not having the right identification documents to access a bank account.”

Chris Pond, Chair of Financial Inclusion Commission and co-Chair Finclusion 2021, comments: “Recent FCA figures suggest four in 10 adults (20 million) have seen their financial situation worsen during the pandemic and one in five would not be able to cover more than a month of living expenses if they lost an income source.”

Tech-enabled solutions The 2021 Finclusion campaign aims to promote tech-enabled solutions to financial exclusion challenges and builds on existing innovations such as alternative ways to assess credit ratings, pre-payment cards for those without a current account to access online shopping, and new approaches to supporting vulnerable customers. Sujata Bhatia, COO Monzo and co-Chair Finclusion 2021 says: “Customers expect this of us. Employees expect it of you. And we all exist to make this a better world”.

It follows the Kalifa Review of UK fintech, which identified that innovative fintech solutions have the potential to do more still to reach the financially excluded. “What we want to do with the campaign is encourage, inspire and support those fintech entrepreneurs that would like to start or scale a more socially-driven business,” Roberts adds.

Image provided by Tech Nation

Societal cost of exclusion “We want to provide a platform that brings together purposeful people from financial institutions, fintechs and civil society to raise awareness of the issues, stimulate discussion and drive action to solve these problems of financial exclusion.”

Shân M. Millie, founder of Bright Blue Hare and co-Chair Finclusion 2021, says: “Financial exclusion was a problem preCOVID: it is, arguably, nothing short of an emergency today.”

Find out more at technation.io/ finclusion

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Can fintech end our unseen business crisis?

As small businesses adopt new finance platforms to meet fresh tax reporting requirements, there’s hope these tools could help end a £23 billion poor payment scourge.

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any of us are familiar with the challenges facing smaller firms following 18 months of on-again, off-again lockdowns – supply chain disruption, spiralling utility bills and surging employment costs being three of the more recognisable among them.

For a lot of small businesses, though, the biggest thorn in the side is one often overlooked. It stifles growth and serves as a source of daily anxiety. It existed before lockdowns but has been hugely exacerbated by them. Its name?

Poor payment.

Before the pandemic hit at the start of 2020, Pay.UK found that the sum owed in late payments stood at £23 billion, up more than 70% from the previous year.

Exceeding payment terms As a UK supplier which dutifully delivers and issues invoices in good time, it’s sadly not unusual to be on the receiving end of payment terms far exceeding the 30 days stipulated by the Prompt Payment Code, invoice discounting to release funds, sudden changes to payment terms, or, in the most extreme cases, the absence of any payment at all.

Before the pandemic hit at the start of 2020, Pay.UK found that the sum owed in late payments stood at £23 billion, up more than 70% from the previous year.

Our research indicates that matters have worsened, with six in 10 small

businesses reporting an increase in late payment, or a total freezing of payments, because of COVID-linked disruption.

Pay.UK has also found that a quarter of small business owners worry about poor payment outside of work. The cost of this crisis is far greater than a hit to the bottom line.

Fintech as empowerment Thankfully, there is hope on the horizon. Smaller firms are now investing in new software to meet new Making Tax Digital reporting requirements. This is placing a strain on many – meaning increased costs at a time when cash reserves are low and inflationary pressure is growing.

On the upside though, this kind of software often includes invoice management tools - empowering firms to keep on top of when to issue, collect, charge interest on and chase what they’re rightfully owed.

Here at FSB, we’re equipping our members with the combination of fintech and legal support which is often required to keep payments coming in on time.

As we continue our campaign to bring the UK’s pernicious poor payment culture to an end, we have in fintech found a new way to tackle the scourge.

WRITTEN BY Martin McTague Vice Chair, Federation of Small Businesses (FSB)

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Fintech companies must work together in a growing market Companies operating in the fintech space are looking more towards collaboration than competition as the rapidly expanding market grows further.

INTERVIEW WITH Muhammad Shafie CEO, Supreme Fintech

WRITTEN BY Mark Nicholls

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s the fintech market continues to grow and evolve, companies are increasingly looking to collaborate and work together, according to one of the newer players in the field.

Datuk Seri Utama Muhammad Shafie Abdullah, CEO of Supreme Fintech, believes that the market is growing so quickly, there is enough business for emerging companies to thrive and survive, rather than waste resources and energy in fierce competition with one another.

Latest figures suggest that the market value of fintech companies is already around USD 1 trillion and surging ahead of the value of the largest banks.

Collaboration is key Shafie believes that collaboration with other fintech companies is a crucial aspect of the business approach.

“It is a huge market,” he continues.

“If we become competitors, everybody is going to lose, so it is better that we collaborate with each other and share the market. Similarly, we are helping new fintech companies enter the market and grow together with us. For example, our collaboration partner Elite Wallet, whom we have aided and supported to get their E-Wallet systems live, powered by Supreme Fintech.

As to future trends, he expects that fintech will grow further and become a dominant force in the banking sector, as the markets become even more aggressive next year: “We aim to work closely with high street banks so they may develop a smart partnership with fintech companies to take the banking industry to the next level.”

“It will be a sturdy, solid, reliable market going forward,” he adds.

“Fintech has different polices to high street banks and it knows its customers better, it communicates and gets to know who the customers are.”

Supreme Fintech, launched in December 2018, is a challenger bank in the fintech industry offering a state-of-the-art banking platform to private bankers and corporates across the globe.

The high-tech operational infrastructure brings economies closer together by encouraging efficient overseas investments and expenditure.

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Intelligent innovations It does that by bringing intelligent innovations into the market that break down the barriers traditionally faced by individuals and corporations while investing abroad.

Shafie says: “We are in the payment gateway system and trying to be ever more advanced, providing customers with hassle free platforms where they can transfer and receive funds globally. Supreme Fintech is a unique banking operation with automation, state-of-the-art security systems, the Internet of Things, connectivity, computing and artificial intelligence.

“It is a smart platform that allows real-time transactions with superfast response times that performs a banking experience across the globe with ease of handling on all banking transfers. The timing of response is also very important in transactions.”

With high adherence to compliance and helping to out-manoeuvre any money-laundering threat, it has established strong connections with other companies to extend the reach for its customers.

Re-inventing the banking revolution The company uses encrypted technology to ensure security and compliance, with systems built in a way that helps to connect from business to consumer and business to business solutions.

“Because we understand the markets and the problems – we are trying to bring the Asian market to Europe and the European market to Asia and that way, we have a better market growth,” he explains.

“Customers’ money will always be safe with us as we ensure all due diligence to make sure that money is transferred safely,” adds Shafie, who sees fintech companies as key in re-inventing the banking revolution.

“What we are trying to do is assist customers to go cashless and we find that they love the idea. We also have transparency. We know our customers well, as we communicate with them, we know their business and what opportunities they have.”

Read more at supremefintech.com

We know our customers well, as we communicate with them, we know their business and what opportunities they have.

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Artificial intelligence (AI) in lending: the importance of humans and machines The assessment of creditworthiness of prospective borrowers by banks and fintech lenders using AI and machine learning (ML) models is one of the most transformational use-cases of AI in finance.

WRITTEN BY Iota Kaousar Nassr Policy Analyst, OECD

Wealth managers are ready for digital transformation Wealth management and advice firms are now operating in an increasingly digitised environment and all firms recognise the need to enhance their proposition through the innovative use of technology.

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he COVID-19 pandemic has accelerated digital trends that were already there, in part thanks to shifting demographics plus market and legislative changes. According to the Department for International Trade’s UK Fintech State of the Nation report 2019 (1) 56% of traditional financial institutions have already put digital innovation at the heart of their strategy. Plus 82% of established financial services firms1 expect to increase fintech partnerships in the next three to five years.

Fintech in the UK to double by 2030 Fortunately, the UK has one of the leading fintech industries in the world. The UK tech start-up and scale-up ecosystem is valued at GBP 463.6 billion (USD 585 billion) 120% more than in 2017 - and more than double the next most valuable ecosystem, Germany, at GBP 217 billion (USD 291 billion). Current estimates suggest there are over 2,500 fintech firms based in the UK alone and the number is estimated to more than double by 2030.1 We also know, thanks to an extensive and recently released report from Lexis Nexus, that digital innovation is being driven not just by the wealth management industry on its own but is something investors are demanding.

Digital access has become a big priority for them according to 40% of investors.

Meanwhile, 75% of wealth executives expect digital interaction will be the norm in two years and 89% of investors say their preferred communications 14

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channel will be through mobile apps.

Greater access for customers However, how the digital transformation of the wealth management industry is facilitated is less clear. Consequently, PIMFA with the support of Morningstar, is to launch its own Wealth Tech platform in the first quarter of 2022.

There have been several false dawns for technology in financial services in the past - think the revolution in online banking expected 20 years ago that, in truth, has only really taken hold in recent years.

But this time feels different. In part, it is the result of technological developments that have led to technology use becoming far more commonplace. Amongst other things, investors want greater access to markets, more flexibility, more contact with their wealth manager or adviser, and more convenient forms of communication. The wealth management and advice profession knows that this digital transformation is key to its continuing and future success in helping people to build their financial futures.

References 1. https://assets.publishing.service.gov.uk/government/uploads/system/ uploads/attachment_data/file/801277/UK-fintech-state-of-the-nation.pdf

WRITTEN BY Liz Field CEO, Personal Investment Management and Financial Advice Association (PIMFA)

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redit scoring models powered by AI provide risk scoring of thin-file clients with limited credit history or insufficient collateral, such as micro or young SMEs. Conventional credit information combined with big data (e.g. digital footprints) feeds into ML models enabling the extension of credit to unbanked/underbanked customers, potentially promoting financial inclusion.

Risks of bias and discrimination This AI use-case, however, raises risks of disparate impact in credit outcomes and the potential for discriminatory or unfair lending, stemming from poor data management, combined with the lack of transparency or explainability of AI-based models. A neutral model that is trained with inadequate data, such as poorly labelled or inaccurate data or data that reflects underlying human prejudices, may produce inaccurate results even when fed with ‘good’ data and vice versa.

Biased or discriminatory outcomes in AI credit rating models can be unintentional. Algorithms may combine facially neutral data points and treat them as proxies for immutable characteristics such as race or gender, thereby circumventing existing non-discrimination laws. While a credit officer may be careful not to include gender-based variants in a model, the model can infer the gender based on transaction activity and potentially use such knowledge in an assessment of creditworthiness.

It is important to look at AI in finance as a technology that augments human capabilities, instead of replacing them.

The issue of explainability Given the difficulty in comprehending, following or replicating the decision-making process of ML models, lenders may be limited in their ability to explain how credit decisions are made, while consumers may have little chance to understand what steps they should take to improve their ratings.

A decision-aid rather than a decision-maker It is important to look at AI in finance as a technology that augments human capabilities, instead of replacing them.

A combination of ‘human and machine’, whereby AI informs, rather than replaces, human judgment could allow for the benefits of AI to be realised, while maintaining the human safeguards of accountability and control in the ultimate decision.

Emphasis should be placed on human primacy in decision making for higher-value use-cases, such as lending, which have a significant impact on consumers. Clear communication and disclosures around the use of AI and the safeguards in place to protect consumers can help instil trust and confidence and promote the adoption of such innovative techniques in a safer manner.

Read more: Artificial Intelligence, Machine Learning and Big Data in Finance www.oecd.org/finance/Artificial-intelligence-machine-learning-big-data-in-finance.htm OECD Business and Finance Outlook 2021: AI in Business and Finance www.oecd.org/finance/oecd-business-and-finance-outlook-26172577.htm

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Our business is payments. But our focus is on enabling businesses to thrive.

Powering business growth, starting with payments Strategic enablement of payments in the business ecosystem is a critical step in ensuring organisations thrive and prosper.

T INTERVIEW WITH

Mike Benchimol COO, Checkout.com WRITTEN BY Mark Nicholls

Paid for by Checkout.com

he fintech scene in the UK and Europe is thriving, underpinned by significant investment, growing customer demand for innovative new experiences and a better understanding from governments and regulators about how fintech innovation can deliver substantial benefits to businesses, consumers and communities.

At the heart of the fintech ecosystem are payments, an industry worth upwards of USD 2 trillion, according to McKinsey. Despite this, it’s a space that until very recently has been untouched by innovation. However, with the globalised digital economy now demanding businesses collect and move money efficiently and at speed, payments have stepped out of the shadows and taken their rightful place in the spotlight.

The new generation of payment providers For decades, online commerce was powered by layers of legacy systems that made collecting payments expensive, unreliable and complex, according to senior fintech figure Mike Benchimol. But with the increasingly interconnected nature of the global economy and a need for swift and efficient payments across jurisdictions, several fintech companies have emerged to fill the void.

Benchimol is COO of Checkout.com, a leading global payments solutions provider whose technology is built to meet the needs of fast-moving businesses.

The company enables businesses to accept and make payments seamlessly at scale around the world.

The company does this by providing its gateway, processing and acquiring services through a single API integration. This not only makes integration seamless and allows businesses to make changes fast, but it also provides them with full visibility into their payments data.

As a result, companies can better understand their customers’ needs and see payment trends in realtime. While Checkout.com’s on the ground teams in 19 offices around the world partner with merchants to optimise their performance — a careful balancing act of minimising failed payments, reducing costs and mitigating the impact of fraud.

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Developing the financial infrastructure The UK Government is helping fintechs scale internationally and enabling better access to global talent. In Europe, fintech innovation is viewed as integral to the future of the EU economy.

“The investment in the UK and European fintechs ecosystem might be a fraction of what we’ve seen in the US. But a number of UK and European fintech now have a seat at the global table,” adds Benchimol, who expects fintechs will continue to expand in the financial services value chain, with many joining names like Klarna and Wise as global household brands.

There is also a growing trend for companies that previously had little to do with fintech or financial services, but now see elements of fintech as a new revenue driver for their business.

“Take the gig economy and companies like Grab and Deliveroo,” he continues. “Their business is powered by payments, collecting funds and disbursing them to the many players. They want to control the experience but do not want to build the infrastructure. That is where we come in. We build the payments infrastructure that enables them to innovate and design new business models.”

Payments that power innovation Payments aren’t just a way to collect money from customers. Payments are at the heart of economic activity and a catalyst for innovation and growth for those businesses leading the way in the globalised digital economy.

“The problem is, for many businesses, payments remain a space layered with complexity. So the more we can do to remove that complexity, the more we can empower businesses to reach new customers and unlock new revenue streams,” says Benchimol.

In a space as dynamic and fast evolving as payments, there is untapped opportunity everywhere. The role of payments providers like Checkout.com is not only to provide a technology solution, says Benchimol, it’s also to partner with businesses and build the future together. “Our business is payments. But our focus is on enabling businesses to thrive,” he concludes.

For more information visit: checkout.com

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