Fintech revolution in banking: Leading the way to digital

| September 20, 2016

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Fintechs are mostly start-up technology and financial expertise firms, a vessel of financial technology that can be described as an emerging financial service sector of the 21st century. The term originally applied to technology correlated with the back end of established consumer and trade financial institutions. Fintech firms have not completely suppressed the traditional banks yet, as these firms are still in the early stages of making a mark. Banks should swiftly adopt this change of growing acceptance for technology in banking by capitalizing on their existing goodwill, and by applying good strategies for their betterment.

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Citywide Banks

For over 50 years, Citywide Banks has been focused on moving our Denver/Boulder community forward. All of our employees, family ownership, board members, and clients call Colorado home. For us, it's about honoring the community by helping Colorado companies grow, ensuring Coloradans' financial assets are protected, giving a hand-up to our neighbors in need, and celebrating our shared blessing of living in Colorado.

OTHER ARTICLES

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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FINTECH

Benefits Of Outsourcing Software Development To The Fintech Industry

Article | March 20, 2020

Introduction In the ongoing technological era, the outsourcing software development company transports their valuable resources to their core business model and helps businesses to save a lot of time and money. To survive the digital era for financial institutions helps to drive efficiency in Fintech companies. Moreover, software development outsourcing companies offer solutions that enable financial institutions to manage bulk data, tech products, and much more to build an efficient environment with their tech services. The financial service industries are becoming a leader in software development and corporate new strategies for fintech businesses. Many companies are planning to use this working model that is specialized in all processes and seek more agility and quality. Outsourcing software development to the fintech industry can bring many gains to companies, so, in this blog we’re going to look at them closely. According to research, investments in fintech are expected to reach $40 billion in 2021. Additionally, software outsourcing companies makes the development process smooth and improves the quality of data analytics in the industry. Read on to know the benefits of outsourcing software development to the fintech industry and achieve the dedicated digital transformation goals of your business. What Are The Benefits Of Outsourcing Fintech Software Development? Expand your business development The benefits of outsourcing software development services creates a pleasing and commending condition for the fintech industry. It becomes easier to execute actions and plan for the company’s expansion if the management focuses on the core business and internal quality processes. Additionally, the development service provider also helps to sustain the growth of the operation without investing huge investments in infrastructure and technology. Economies of scale If you’re planning to internally develop a software application requires both money and time. And not everyone has an extended IT team with dedicated developers. In such situations, software development outsourcing companies become your partner. The services provided by software outsourcing agencies for fintech development helps businesses to achieve economies of scale and allow them to invest more time on core competencies and perform critical tasks. However, software development outsourcing offers competitive advantages to fintech industries by minimizing costs, better customer service, and maintaining product quality with an affordable budget. Optimize time for dedicated professionals and managers Hiring outsourcing software development services helps businesses a practical and sensible optimization of the time of professionals and managers. If your business is planning to enhance the process of professionalism. To such a degree, fintech industries can directly help to increase the capital and implement strategic tasks and analyze surveys that collaborate to make the right decisions. Thus, outsourcing software development helps to monitor indicators and supervise the possibility of risk to the company. Risk Management/ Critical-path method IT outsourcing software development service providers carry a lot of risks. So to grab the absolute advantages, an organization should build effective risk management plans. Reducing the number of data breaches is one of the most important challenges faced by many fintech industries. This challenge is even more critical when you consider the information type such as salaries, credit card information, social security numbers, and much more which can be used by criminals for gaining profit. Various components and operations help to reduce risks and provide a successful path for outsourcing when you know the challenges and tackle the situation. Increased profits through data analytics Finance is the leading data collection and analytics industry that helps to increase software profit via data analytics. Popular investment banks like Goldman Sachs and JPMorgan have employed specialists who analyze data when issuing trading futures. These fintech software development industries are now identifying customer data and helping them to increase sales and promote customer loyalty. To analyze creditworthiness and provide services to each customer they use credit scores and demographic data that also helps them to build analytics software with the Python programming language. Reduce software server load via cloud computing To implement cloud computing technology, the fintech industry has been reluctant to use web-based storage for bulk data which is vulnerable to hackers. There are few improvements in data security that have led banks to begin integrating modern technology into their core business functionalities. To store sensitive business information related to accounting and communications, many banks are using cloud computing. In recent years, it is reported that the SaaS model is one of the best models that is implemented by fintech software enterprise to store emails, contact lists, and other important information online. Faster product development Hiring software outsourcing companies helps fintech industries to start your projects quicker and complete them before the deadline. The outsourcing enterprise implements traditional hiring processes for software development projects and instructs those dedicated developers to perform critical tasks who can start product development without investing much time on the hiring process. The dedicated team of developers working at any outsourcing companies help to shorten the fintech software development lifecycle and work on multiple projects to quickly resolve common problems and reduce the overall length of the software. The Verdict The fintech enterprise is investing millions of dollars to build custom software according to their business requirement to survive in the new data-driven marketplace. Leveraging a fintech software development service is much bigger than just launching a system that enables the creation of innovative fintech solutions in the future. Many of these companies are switching to fintech software development that provide a dedicated development team to perform critical and complex tasks of any software and reach their goal without distracting from their core missions.

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CORE BANKING

Open Banking and Trust a key issue

Article | March 20, 2020

Open Banking is all about the customer being in control of their data and funds. It gives them the freedom and flexibility to decide when and with whom to share their valuable information. However, as with all vibrant and progressive ecosystems, speed, security, and ease of use will determine open banking’s future success along with the key issue of trust. Will the end user trust people to share data with them and trust their banks to still protect their data? PSD2 Open Banking gives Payment Service Users (PSUs) the legal right to share their transactional account data with regulated third party providers (TPPs). For this to be possible, the 6,000+ Financial Institutions providing transactional payment accounts that can be accessed online have to put in place open banking APIs. These APIs give TPPs the access required to either make payments on an account holder’s behalf or view account data and funds, both of which require the account holder’s prior explicit consent. Access can only be denied if a TPP is believed to be unauthorised or fraudulent. Open banking regulation has given rise to a new group of FinTechs who are seizing the opportunity to create innovative apps and products with the customer at the core of the offering. At the end of 2019, 240 TPPs from across the EEA and UK were regulated to provide open banking services. A year later, this figure had increased to 450 (excluding the thousands of credit institutions that are also able to act in the capacity of TPPs). The near doubling of newly regulated entities demonstrates user demand for the innovative products and services that these organisations are offering – it is now down to trust and security in the ecosystem, along with ease of use, to drive volumes. Source: Konsentus The ability for TPPs, many of whom may be unknown to these Financial Institutions, to request immediate access to valuable data and funds presents many challenges and risks – all of which must be addressed without introducing potential friction in the customer journey. The main challenges are knowing if a TPP is who it claims to be and whether it is regulated to provide the services being requested at the time of the transaction request. After all, these are the key factors enabling the bank to trust the TPP and feel confident the end user can trust them. The added difficulty of knowing which markets within the EEA a TPP is authorised to operate in is an additional challenge. Financial Institutions have long been the trusted guardians of their customers’ data and funds. Although the open banking model means the customer now has ultimate control of their data, it is still primarily the Financial Institution’s responsibility to ensure nothing goes wrong and they are likely to be held liable in any disputes that arise. There is also the very real reputational risk to Financial Institution if something does go wrong. Checking a TPP’s identity, its current regulated status, and the services it is requesting to perform are essential but not easy tasks to complete in that, firstly, a Financial Institution needs to determine whether a TPP is who it claims to be. This is done by having real-time access to the 70+ Qualified Trust Service Providers (QTSPs) who can issue PSD2 eIDAS certificates. These eIDAS certificates contain the requisite information on a TPP’s identity and are used to secure communications between Financial Institutions and TPPs. They also digitally seal messages, ensuring the integrity of the concept and proof of origin. However, an eIDAS certificate can have up to a two-year validity period. During this time, changes may have been made to a TPP’s regulatory authorisation status by its Home National Competent Authority (NCA). This introduces significant risk to the Financial Institution’s decision process. eIDAS certificates also do not contain information on the countries a TPP is authorised to provide their products and services into under passporting rules. This information is held on the TPP’s Home NCA Credit Institution and Payment Service Provider (PSP) registers. Between them, the 31 NCAs maintain over 115 databases and registers. Checking them at the time of a transaction request is paramount to prevent fraudulent TPPs from slipping through the net. According to the Konsentus Q4 2020 TPP tracker, every country in the EEA had at least 75 TPPs who could provide open banking services. These may not all be Home regulated TPPs. Take, for instance, Germany, who had 35 Home Regulated TPPs in December 2020 but an additional 112 TPPs who could passport in their services. To do the requisite due diligence on all these TPPs would require having online access to all the databases and registers hosted by the NCAs regulating these TPPs. This means connecting to the 31 NCAs and interrogating over 115 separate registers in real-time, in addition to connecting with all the QTSPs who issue PSD2 eIDAS certificates. When a Financial Institution is presented with an eIDAS certificate by a TPP, if a real-time online connection can be made to all the legal sources of record, the Financial Institution can make an instant informed risk management decision on whether, or not, to give the TPP access. All this can be done behind the scenes without the end user even being aware of what is happening. As volumes look to dramatically increase over the next few years fraudulent and other sorts of attacks are bound to increase. Financial institutions are going to face increasing challenges around protecting end users’ data, ensuring access is only given to those with the appropriate authorisations and permissions. A very real risk for them is the reputational one; after all, end users may not be that good at separating a reputational issue around open banking from broader issues around their banking relationship. For Financial Institutions, maintaining trust in their brands is going to be crucial going forward, but the risks are going to increase if they have not locked down who can access end user account data and funds.

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How to access small business loans for COVID-19 financial relief

Article | March 20, 2020

The CARES Act recently passed by Congress funded financial assistance for small businesses experiencing economic hardships caused by the COVID-19 pandemic. Two Small Business Administration (SBA) loan programs established or expanded by the act are of particular interest to family physicians: the Economic Injury Disaster Loan (EIDL) and the Paycheck Protection Program (PPP).

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Spotlight

Citywide Banks

For over 50 years, Citywide Banks has been focused on moving our Denver/Boulder community forward. All of our employees, family ownership, board members, and clients call Colorado home. For us, it's about honoring the community by helping Colorado companies grow, ensuring Coloradans' financial assets are protected, giving a hand-up to our neighbors in need, and celebrating our shared blessing of living in Colorado.

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