5 Ways AI can Transform Fintech Industry

| February 25, 2020

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Fintech is one of the fastest-growing industries, owing to the rising penetration of internet users. There is a paradigm shift to mobile devices for performing financial transactions and related actions. Behind the booming fintech market, there are several technologies that are contributing to making the system fast, secure, and scalable. One such technology is Artificial Intelligence (AI). The AI in the fintech market is estimated to reach USD 35.40 billion by 2025 ( Mordor Intelligence).

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How machine learning is changing financial services

Article | April 13, 2020

Artificial intelligence (AI) has become integrated into our everyday lives. It powers what we see in our social media newsfeeds, activates facial recognition (to unlock our smartphones), and even suggests music for us to listen to. Machine learning, a subset of AI, is progressively integrating into our everyday and changing how we live and make decisions.

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How to Utilize Open Banking Opportunities in 2020

Article | April 27, 2020

Everyone wants to build a creamier, faster, and more efficient financial services journey — which in 2020 is not a point of controversy or friction. Today, customer demand is touching peaks. It is customer demand that forces businesses come out of their silos and collaborate with others to create products and services that are open-source, non-proprietary, and do not lock down users into an ecosystem. The launch of Open Banking is initiated to fundamentally change the way consumers, businesses, and banks pay and get paid, and how they maintain their data. The foundation of a unified Application Programming Interface, or API, across financial institutions, constitutes a foundation in which data can be seamlessly and securely shared right away. While open banking is in the initial stages of its evolution, many assume this trend to expedite and reshape the banking industry in significant ways. Thanks to open banking developments around the world, customers are becoming more informed of the essential value of their information and are increasingly seeking more command over their financial data. Table of Contents •Why is Open Banking Important? •How Does Open Banking Work? •Open banking in United States •The Wave of Change in Payment Arena •Cloud-based Processing Services •Conclusion Why is Open Banking Important? The most valuable asset in the 2020 world is data, and banking data is the finest of the crop, as it facilitates insight into how consumers and businesses are employing money, saving, and acquiring debt. The data has got value and the data that the bank holds and the customers, belongs to the customer and not to the bank, that’s a fundamental realism or premise that the government has is writ large in European legislation. You will be pestered by its called GDPR but fundamentally enshrines the fact that the data belongs to you, the consumer or to the SME, not to the financial institution. And if you as a consumer want to use that information to get access to better products and better services, it’s entirely your right to do so. That’s what open banking is trying to deliver. It holds the promise of making finance more convenient, better tailored and fundamentally smarter. From industry point of view, open banking promises to lower the barriers to entry to financial services and lower the barriers to innovation in financial services. That’s why it is so exciting for many of the fintechs. Open Banking delivers enormous opportunities in 2020, for the fintech ecosystem that goes beyond necessary to invigorate customer relationships and transform businesses. Through ecosystem partners, banks can enter customer journeys earlier than before and create added value to expertly serve enduring customers as well as attract new ones. Customers foresee seamless digital experiences, and platform-based business models, that are a quintessential element of the digital economy. When embracing the opportunities Open Banking brings, banks can leverage the ability, speed, effectiveness, and innovativeness of startups to enhance their product and service offerings. Banks also have access to other banks’ data. By genuinely performing multi-banking services, they can drag competitors’ customers and spread awareness of their brand. How Does Open Banking Work? Let’s put this into three: • What the banks do • How you get registered • What the customer sees The banks have put into places API’s, this means they have made huge technology decisions to expose customer data and access the data from other third parties. For open banking to work, you have to be governed by the OBIE rules. The OBIE is open banking implementation entity and you can either be an AISP or a PISP that sits under the OBIE. The AISP essentially means you are an account information services provider and PISP means you are payment initiation services provider. One means you can aggregate transaction data and customer data, the other means the payments that you can initiate from your third party, from your bank. The third element to this is TSP, a technology service provider. And they basically provide all the rails between the banks and between third parties to make sure that this whole system runs right. From the consumer perspective, at the end, it gives them the ability to share their data with third parties but crucially have the permissioning power to be able to do that. An AISP can condense reams of bank account statement data and pass it to the customer in a single interface, making it ideal for treasurers of multi-banked organizations. Payment service users – whether they are individuals or businesses, can guide their banks or payment service providers to share their bank balance and transaction data with regulated AISPs. To display this information on a user-friendly dashboard, the AISP can convert all this transaction data into the expected format and send it to the customer’s ERP or Treasury Management System. Before the initiation of Open Banking, businesses and consumers were logging into each bank individually to initiate payments, using various workflows and security etiquettes. With the arrival of Open Banking, individuals or businesses are now equipped to mandate their multiple banks or payment service providers to receive payment instructions via their PISP’s app. Learn more: Open banking in the same language Open banking in United States According to Deloitte Insights, The open data revolution is most obvious in Australia, the United Kingdom, and other countries in the European Union. Each has distinct regulations that require banks to share customer data with third-party providers as per customers’ instructions. Other countries, such as Canada, Japan, and Singapore, are also considering similar regulations. Australia, however, has taken it a step further: It has gone beyond the financial services sector, applying an expansive set of rules on consumer data rights and data-sharing to other industries as well. We do not know yet whether this will be a model for other countries, although, in the United Kingdom, similar efforts are underway. While the open banking model in the United States may take a different path, US banks can learn valuable lessons by looking at how it has been implemented in more regulatory-driven environments. Bank leaders may find it particularly helpful to review how different regions set technical and customer experience standards for data-sharing. To date, there are no signs that new open banking regulations are being developed in the United States. Learn more: Open banking model strategy The Wave of Change in Payment Arena One interesting example of the innovation encouraged by Open Banking is HSBC’s Connect Money application. This application enables customers to view all their accounts within single application-even if those accounts are scattered across different banks. According to an article by Accenture "How Open Banking is Catalyzing Payments Change" Connect Money demonstrates one of the most fascinating features of Open Banking. Many Open Banking products and services are subject to “network effects”—they become more valuable as more banks participate. If Connect Money allowed customers to track only HSBC accounts, it might have been somewhat useful. The fact that the app connects across many banks is what makes it powerful. This aspect of Open Banking can also make it easier for new entrants to grow and gain purchase in the market since more access to data means more opportunities to create value for customers. In the payments platform, Open Banking is advantageous to small and medium-sized businesses (SMEs). This is because it facilitates account aggregation, better financial management, easier credit checking of customers, and the unification of lending and accounting applications. With Open Banking, SMEs can receive and make payments using different platforms with better clarity and best momentum. Open Banking payments are validated instantly between consumers and their banks. This means the chargebacks that merchants must pay because of fraud or rejected payments becomes zero. This offers plentiful savings for all merchants. Payments powered by Open Banking also give real-time credit transfers, confirming the payment and empowering merchants to ship the product immediately. Cloud-based Processing Services Open Banking also maintains cloud-based processing services- a compelling alternative for decentralizing processing and encouraging payments innovation. The benefit includes: • More economical costs • More regular compliance maintenance • Advanced enterprise agility • The capacity to flex volumes quickly The new payment option, called IATA Pay, provides customers more extensive selection of payment methods when buying airline tickets. The most popular services that are being worked in 2020 covers Request to Pay and P2P payments services. We can anticipate seeing many more in the following years. Conclusion Open Banking scales to opportunities preferably, then threats. Done perfectly, banks can flourish, encouraging their customer franchises and brand, securing a defined culture, and fostering business through open collaboration with the world beyond financial services. We are witnessing the initial stages of a seismic industry migration that will come into full power over the next five years. The evolution of innovations with the potential to force simplicity and enhance flexibility is turning a once complicated web of financial institutions into centralized tools to maximize value creation. Open Banking scales to opportunities preferably, then threats. Done perfectly, banks can flourish, encouraging their customer franchises and brand, securing a defined culture, and fostering business through open collaboration with the world beyond financial services. Consequently, any bank that needs to stay consistent in 2030 must begin to design their Open Banking strategy immediately.

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The Post-pandemic Market Infrastructure Growth Opportunity

Article | August 17, 2021

The current global pandemic has changed our mindset and habits, as we are forced to revaluate the current ways we do things by thinking further outside the box. Over the last 12-18 months there has been a complete contrast of fortunes in the capital markets technology sector, with some firms flourishing, some struggling to survive, and others having to reinvent themselves to do so. Here at GMEX Group it has presented a substantial opportunity for innovation, which continues to accelerate on the back of the momentum already built. One such opportunity centres on digital market infrastructure-enabled digital assets which, despite near-term market-driven volatility, will continue to experience increasing demand for solutions and services from institutional capital markets firms. Market Infrastructure Evolution GMEX Group started as a FinTech company over 9 years ago and focused on supplying technology to traditional exchanges and post trade operators based on a partnership-driven approach. Over the last few years, as a growth-stage company, we have focused on both digital market infrastructure solutions (including issuance, exchange trading, clearing, settlement and digital custody for digital assets), as well as continuing with traditional market infrastructure enablement. Our hybrid market infrastructure approach has enabled us to deliver technologically advanced, institutional grade, future-proofed solutions that take advantage of the inherently positive characteristics of both traditional and digital market infrastructure. In today’s environment, exchange matching engines, digital trading platforms and post trade systems need to embrace a hybrid ecosystem approach. Bridging the gap between traditional and digital capital markets, whilst effectively mapping to evolving regulatory frameworks, is essential. This requires an approach which encompasses traditional and digital assets, digital currencies, security tokens and digital securitisation of traditional assets including derivatives and commodities. The increasing regulatory requirements for digital asset infrastructure and the resultant demand for solutions that are fit for purpose has played into our core strengths. We’ve worked to provide a complete hybrid market infrastructure product suite called GMEX Fusion, which is ideally suited for regulated exchanges, trading venues, custodians and banks focused on both traditional and digital assets of all kinds. Our solution set has been designed to support the latest technology and business challenges that are impacting the way traditional exchanges are looking to operate as they look to embrace digital transformation. GMEX Fusion also addresses the demands from the cryptocurrency exchanges, digital asset trading venues, Non Fungible Token (NFT) marketplaces and emerging markets looking to start-up or enhance their exchange ecosystem and support digital assets. GMEX is working with many of these entities across multiple jurisdictions as our footprint is very much global, with clients and partners all over the world. Exchange 4.0 The Fourth Industrial Revolution (4IR) is driving technological innovation in many spheres, and with it comes the need to move from analogue to digital - and embrace Exchange 4.0. The industry-changing network will see exchanges, trading venues, post trade operators, custodians, and other services interconnect more seamlessly, with the ability to swap services and assets across jurisdictions and across different types of users. This transformational solution will necessitate digital exchange trading systems, order matching engines and post trade platforms to transition from the legacy solutions that have been around for decades. We are now moving past the second and third generation of blockchain in financial services towards Exchange 4.0 at an accelerated pace. As an industry, we’re in a state of flux which has merely been exacerbated by the crisis. If we look at FinTech firms now, I would argue it’s the most exciting time ever because so many new technologies are emerging. With blockchain on the one hand, and AI, Internet of Things (IoT) and quantum computing on the other. From being nascent, many of these are now starting to grow as well as integrate. With all this technology around, the opportunity for innovation is immense. But that’s counter-balanced by the inertia of existing legacy platforms, processes and mindsets. We know how the smartphone revolutionised the way we communicate, online and in every other fashion. Even 10 years ago, we couldn’t have envisioned where we are now and the extent to which it’s developed. We are now in the same place in financial markets. We don’t necessarily see it and despite the innovation there are many silos which don’t talk to each other effectively. There is strong client demand for the full spectrum of digital and hybrid services. However interoperability and time to market remain a challenge, with traditional and multiple types of blockchain-enabled digital market infrastructure being severely fragmented. The team at GMEX group firmly believe that digital market infrastructure and related services need to integrate with existing market infrastructure and technologies to foster interoperability. By doing so there is an opportunity to interconnect the whole capital markets value chain of participants across international nodes (jurisdictions), to more easily trade, clear and settle traditional assets and digital assets and eradicate the age-old exchange silos. The immense opportunities As unfortunate as the current crisis is, it will end and immense opportunities will follow once normality resumes. There is expected to be exponential growth in digital assets over the next five years, with a continued uptick in institutional demand. This is not only a huge opportunity for FinTech firms, but also a big opportunity for financial markets firms and those that provide financial services. To GMEX, this presents an opportunity where the right answer isn’t the traditional status quo and it isn’t the decentralised Wild West. The right answer is somewhere in between, and that presents an opportunity to create new products, new asset classes and new revenue streams. The ability to harness hybrid market infrastructure will be essential in the capital markets sector, irrespective of whether the underlying asset class is traditional or digital. And to achieve the winning position, innovation now is key!

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Insights from the Ground: Managing Through the COVID-19 Pandemic

Article | July 16, 2020

In this series, we share insights from our Citi Country Officers (CCOs) around the globe as they reflect on their experiences during COVID-19. CCOs are responsible for leading the entire Citi franchise in their country. They provide alignment and leadership to bring our global strategy to life in each of their jurisdictions. For us at Citi in Italy we prepared for the COVID pandemic in a number of different ways. First, we leveraged lessons learned from our colleagues in the countries that were hit before us, including China and Korea, even if their context was quite different from the European one.

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Exide Life Insurance

Exide Life Insurance, one of the leading life insurance companies in South India, is now growing its franchise in other parts of the country. The company is focused on providing long term protection and savings solutions and has a strong traditional product portfolio with a consistent bonus track record…

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