Business Value of Open Source for Financial Services Firms

| May 25, 2018

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The financial technology industry is moving into a new era of engagement with open source technologies and communities. Having used open source components for decades to build their products and run their datacenters, financial services and fintech firms are increasingly realizing that active participation in open source development is necessary to fully realize their goals to spur innovation, reduce development costs, and attract top talent. This paper outlines how.

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Wisconsin residents can count on WPS Health Insurance to help protect their health, financial security, and peace of mind. WPS provides health insurance, life insurance, and benefit plan administration to private and government customers with service and value considered by our customers to be the very best.WPS is one of the largest health benefits providers in Wisconsin. From traditional preferred provider organization (PPO) plans and self-funded administration to consumer-driven options like our health savings account (HSA)-qualified high-deductible and health reimbursement.

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Banking-as-a-Service (BaaS) Empowers Any Brand to Offer Financial Services

Article | May 14, 2021

Digital banking is not new – major banks began to offer internet banking services in the mid-1990s. However, the traditional banking industry is facing significant pressure from rapidly shifting consumer expectations, changing regulations and increasing competition from digital-native disruptors. Younger Gen Z customers are more apt to use alternative transaction methods such as mobile wallets or P2P payments (e.g., PayPal or the Dutch payment app Tikkie), and businesses are beginning to favor real-time digital payments to improve efficiency, reduce cost and better manage their cash flow. Moreover the ongoing global health crisis is accelerating the movement toward real-time contactless digital payments. Fifty-six countries are now live with real-time payments, and six countries more than doubled their volume of real-time payments in the past year. [i] Due to a joint implementation of the major banks led by the Dutch Payments Association (Betaalvereniging Nederland), the Netherlands is a European leader in terms of the adoption of real-time payments. In the midst of this fast-changing landscape, new business models are arising as digital-natives, FinTechs and incumbent banks partner to offer new banking and payment services in the cloud. One example is Dutch Cobase – a subsidiary of ING Group that bundles business accounts – which recently signed a cooperation agreement with the Nordic bank Nordea and the French Crédit Agricole. Amsterdam-based banking platform Five Degrees supplies its technology to banks such as ABN Amro, Van Lanschot and Knab, among others. Collaboration like this is spurring further innovation as these digital ecosystems expand, attracting new participants. But successfully delivering these new digital services requires the direct and secure, low-latency, reliable exchange of data between partners that interconnection can provide. BaaS needs FinTechs AND banks FinTechs born in the cloud have the IT infrastructure, skills and agility to deliver digital banking and payment services on-demand. They can also offer these BaaS capabilities to any brand who wants to embed financial services in their customer experience. Sometimes referred to as “embedded finance,” BaaS enables businesses to create new products and services along the customer journey as the diagram below illustrates. However, FinTechs typically lack the assets and regulatory license to fulfill financial transactions, and that’s where banks come in. To ensure that deposits and money transfers stay safe, banks are heavily regulated and often insured up to a certain dollar amount for each depositor. This combined with a longer history with customers means that banks have an advantage when it comes to perceptions of how safe and secure a financial transaction will be. As a result, there are a few collaboration paths that FinTechs and banks generally pursue to bring BaaS services to the market: The FinTech buys a bank that already has a license such as Jiko purchasing Mid Central National Bank in the U.S. or Raisin GmbH buying MHG-Bank AG in Germany. The FinTech partners with a bank to borrow their license such as Chime partnering with Stride Bank, N.A. and The Bancorp Bank. The FinTech acquires its own license (a lengthy process that could take up to three years) such as Railsbank in the U.K. or Varo Money in the U.S. The bank partners with a FinTech to launch BaaS services such as Deutsche Bank partnering with Traxpay to integrate supply chain financing technologies and solutions within its own offerings. Regulations are shaping the partnering model The regulatory environment may also impact the partnering model. For example, open banking laws in the European Union and the U.K. require banks to open APIs to third-party developers, making it easier for FinTechs to gain access to bank data. Regulations like these are helping to reduce uncertainty for startups and accelerate innovation in the European banking system. Challenger banks such as U.K.-based Revolut have also benefitted from special licenses that allow them to directly accept deposits, process payments or lend. In the U.S., the Durbin Amendment is accelerating partnerships between small-medium banks and FinTechs in a different way. The Amendment, which has been in effect since 2011, aimed to lower prices for consumers by reducing the fees that retail stores pay to banks when customers use debit cards. In reality, banks just responded by increasing the fees that consumers pay to make up the lost revenue. However, the Durbin Amendment exempts financial institutions with less than $10 billion, making them ideal partnering candidates for FinTechs. How BaaS actually works A hybrid digital architecture for BaaS with a mix of on-premises, colocation and public/private cloud elements. In this example, the bank is the license holder partnering with the FinTech BaaS provider to deliver embedded financial services to a Brand (such as a retailer or transportation business). The bank has also partnered with other FinTechs for real-time and cross-border payments, although it handles any card transactions in-house. Interconnection will be critical for ensuring secure, low latency data flows between the partners and digital infrastructure across the regions where the BaaS is offered. Partnerships like these are steadily growing into ecosystems of digital exchange around financial services that include clouds, networks, banks, FinTechs, payment rails, fraud detection and other service providers. By placing their digital infrastructure close to these ecosystems, leveraging an interconnection approach, banks and FinTechs alike can maximize their competitive advantage. Interconnection provides a more scalable, reliable, secure approach to moving data between members of the value chain than the public internet. With an interconnection strategy, banks and FinTechs can deploy a digital core, extend across edge locations and enhance their capabilities through digital exchange to create new BaaS markets for any brand.

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Cybersecurity: The Hidden Risks of Fintech Services

Article | March 20, 2020

Fintech has drastically improved the products and the services of the traditional financial services in the past few years. However, even after many financial institutions have readily adopted fintech services, there are still some hidden risks in the aforementioned industry. For instance, the integration of the fintech services in the existing banking solutions raised a severe concern for data security. Also, the rapid growth of digital platforms made the fintech industry and its customers uniquely vulnerable to various breaches in IT security networks.

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Why Payments-as-a-Service is the first choice for FIs

Article | February 11, 2020

The pace of change within the global payment’s technology space is still at full speed with no sign of slowing down. While traditional incumbents have until recently taken comfort in their size and decades of dominance, new digital-only challenger banks are ramping up and making a huge impact on the global financial landscape.

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How Blockchain Marketing Helps to Build Better Connections with Consumers

Article | March 8, 2021

Blockchain is a relatively new technology but is significantly changing the world around us. The term refers to a decentralized ledger technology used in cryptocurrency transactions. Almost everyone is now familiar with Bitcoin and other cryptocurrencies. Blockchain technology is utilized to record cryptocurrency transactions and to ensure the security of such transactions. Blockchain technology continues to impact several industries – banking and finance are one of the industries. The trend continues to cybersecurity, shipping, real estate, and also digital marketing. Blockchain began as a technology for cryptocurrencies, but now it is set to take over several other industries. Since blockchain is a decentralized technology, it assures marketers that their transactions are secure by improving cybersecurity. The technology is not centrally controlled, as nobody controls or owns blockchain. With this in mind, marketers are not only waiting anxiously to see how blockchain will optimize or impact their work, but also looking forward understanding how they can better leverage the technology to deal with business partners and reach millions of potential customers in the digital marketing industry. Here are nine ways in which blockchain marketing can help marketers to boost their strategies and thus transform the consumer experience. 1. Targeting and Engaging the Right Audience With regards to the digital marketing industry, an estimate of 70% of marketers fail to target consumers with behavioral data, as only about one in a thousand ads get clicked in an online displays ad campaign. Despite the majority of marketers having lots of consumer data and paying huge fees to middlemen involved in advertising, they are still unable to engage and target the right audience. Blockchain marketing is an effective means through which marketers can use to get the right audience to see their adverts and then engage them with such ads. The technology creates a decentralized search engine where marketers easily reach and get in front of their target audience. Through this technology, marketers can also compensate target consumers using tokens (digital wallets) for providing their personal data to the marketers. Every time someone clicks on adverts on a marketing company’s search engine, they get paid. This increases the hyper-targeting of adverts, and consumers only see those ads that they have shown interest in. In this way, marketers only target and engage the right audience. 2. Ad Fraud Prevention Ad fraud is becoming an increasing problem facing advertisers and marketers. Paying for fake clicks and impressions is a common trend nowadays, as about one in every five pay per clicks is found to be fraudulent. Ad fraud is emptying marketers’ money and distorting their analytical data, which eventually affects their strategic decisions towards their marketing and advertising efforts. With the application of blockchain technology, marketing platforms can display all click-throughs in real-time, and marketers rent out their advertising space and attract quality traffic. In this way, blockchain authenticates clicks and therefore prevents ad fraud. 3. Decentralizing E-Commerce Blockchain is decentralizing how consumers buy products and services online. Marketers can use the technology to create decentralized marketplaces where they can sell their products or services directly to consumers without the need of using expensive third-party platforms. Such decentralized marketplaces have built-in Bitcoin wallets that help to pay and earn in cryptocurrencies without the need to rely on third-parties or intermediaries like banks. 4. Influencer Marketing Consumers normally believe what other customers say about a product or service rather than what a brand is saying about itself. With being that case, the majority of marketers allocate budgets for influencer marketing (a type of social media marketing that uses endorsements and product mentions from influencers) to promote brand awareness, drive engagements with their brands, and reach new target audiences. Blockchain makes it possible for marketers to take advantage of influencer marketing. By leveraging the technology’s immutability and transparency, blockchain marketing helps marketers to authenticate the identity of influencers and validate their followers and get a guarantee of their investment. With the help of smart contracts, payments can be held in escrow until the desired output has been achieved by influencers. 5. Eliminating the Middlemen Marketing involves finance and this means marketers doing transactions through banks. However, blockchain technology comes with digital wallets (cryptocurrencies) and this eliminates the need to conduct transactions through banks. The technology ensures that transactions run smoothly and minimizes the costs involved in making transactions through banks acting as middlemen. 6. Social Media Blockchain marketing is set to change the scenario of social media for individuals providing services to businesses and those using social media to reach consumers. Social networking sites built on blockchain are more secure with no central hosting server. One of the impacts of blockchain is that marketers can validate their own data without the need to rely on third-party tools for it. Blockchain ensures privacy, thus allowing users to transact in a private manner. Only the recipient and sender have knowledge about the contents of the transactions. Blockchain verifies users’ identities and therefore ensures their genuineness. It maintains transparency in social media ads that involve the process of buying, booking, and placing ads, thus eliminates the chances of fraud. Through blockchain marketing, it is possible for markets to get rid of the role of social media platforms (like Facebook, Twitter, Instagram) as middlemen by compensating customers directly instead of such intermediary platforms. When consumers log in on social networking sites, their data is released to marketers and blockchain ensures search data privacy. Marketing firms, which are monitoring customer behavior, are able to obtain all information from one place, which is reliable because of blockchain’s high level of accuracy, and marketers pay consumers for their personal information. Social media has spambots and fake news. With blockchain marketing, marketers are able to verify the content distribution, trace the spread of data, and even block fake contents and their contributors. 7. Data Collection Good data is highly important for marketers. Despite having abundant marketing tools and making attempts to try out different marketing strategies, the majority of marketers are still unable to get quality and accurate customer data. It is only consumers themselves who can provide accurate data. But how can a marketer make customers share their data? Blockchain marketing has made it possible for marketers to encourage customers to share their data in return for some compensation, and this making is a win-win situation for both parties. By putting consumers at the center of the data economy, data obtained in this way is highly authentic and relevant. 8. Smart Contracts Blockchain enables smart contracts, thus helping marketers to offer services to clients across the world. Such contracts are “programmable agreements that execute automatically when conditions are met.” Every contractual milestone must be fulfilled, even for the next steps to come. This ensures that payments are made only after the contract terms are met. The main benefit of a smart contract is that it can process transactions without third parties. The transactions are irreversible and can be traced, and through smart contracts, marketers get a guarantee that they will be paid and contractors are guaranteed of security. Such contracts provide transparency, thus saving time for both parties. 9. Reward Systems and Loyalty Programs Customers always remember when they are made to feel special. Sales loyalty programs work so well when they make customers feel special. Marketers can use blockchain to create an unforgettable, unique experience for customers. Gift cards can be attached to the blockchain, thus creates a safe platform for issuing and maintaining gift cards and loyalty programs. If clients accumulate gift cards but are unable to use or redeem them, then they will have a bad experience with the brand. However, with the use of blockchain, gift cards can be converted into cryptocurrencies or digital wallets, and make it easier for clients to redeem or use them. Conclusion Blockchain technology is still in its infancy and is expected to evolve and grow significantly in the next few years. It is set to disrupt digital marketing, offering marketers a variety of benefits in terms of efficiency, transparency, security, and performance. Marketers who plan to adopt blockchain marketing will be able to provide an increased trust to consumers and a better user experience because of hard-to-crack security and permission-based access of blockchain. With blockchain technology, marketers can gain more accurate information from customers directly interested in their brand. This would not only increase their return on investment (ROI) but also enable them to target adverts to potential customers based on verified data. Marketers interested in global transactions always feel at ease knowing that implemented smart contracts will guarantee secure deals.

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Spotlight

WPS Health Insurance

Wisconsin residents can count on WPS Health Insurance to help protect their health, financial security, and peace of mind. WPS provides health insurance, life insurance, and benefit plan administration to private and government customers with service and value considered by our customers to be the very best.WPS is one of the largest health benefits providers in Wisconsin. From traditional preferred provider organization (PPO) plans and self-funded administration to consumer-driven options like our health savings account (HSA)-qualified high-deductible and health reimbursement.

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