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Operational Risks in Banks: Effective Strategies to Create a Secure Framework

Anusree Bhattacharya | May 2, 2022 | 175 views

Operational Risks in Banks
Risk events in the banking sector and financial institutions can trigger huge losses. Risk events can be managerial, technological, security, and operational. With these operational hazards, the need for protection rises in banks simultaneously. Banks need to function seamlessly, faster, and more accurately in such circumstances.

According to a report by Barclays, prominent banks worldwide have suffered nearly $210 billion in losses from operational risk from 2011 to 2019. Most of these losses were caused by unavoidable errors made by employees and systems when interacting with clients, transactional flaws, and fraud.

Since the global financial crisis, including the pandemic, banks and other financial institutions have become highly observant of their efficient risk management needs. As a result, banks can use techniques to anticipate and fix risk events before or at the right time. However, some strategic risks or challenges still prevail. Let’s understand what those are first!


Strategic Challenges in ORM

Risk management in banks and financial institutions has always been a complex function. Out of which strategic risks are mostly recorded. What are the most prominent strategic risks that banks usually suffer from?


Large & Complex Data Processing

The processing of large and complex data risks puts banks under pressure to monitor exponentially. Most banks still face the challenge of collating extensive customer data, data inputs, processing, and unreliable and dysfunctional tools, which results in the loss of potential clients and fees.


Inefficient Risk Identification Parameters

Most banks do not have risk management tools like KRIs, KCIs, and KPIs. As a result, they are inefficient and do not have a holistic view of the data, which leads to inappropriate risk identification. Further, most banks also do not have consistent risk management protocols across their business, which poses a significant risk to the operational infrastructure of those banks.


Loss of Data Management

Loss of data is also an essential risk that banks face several times. Data management is an integral part of the banking operation, which means it needs core risk management strategies to keep it secure. Data management includes several functions, but the most essential is maintaining data records securely. This is one of the prime risks that banks, even today, keep a close eye on.


The Current State

While banks have been aware of operational risks, they need to be prompt in adapting risk management capabilities and tools to eradicate the complexities and introduce smoothness in the workflow. Currently, banks have developed taxonomies on risk-identification and risk-assessment processes, extensive controls through cloud support, and cyber and control-testing procedures.

While the banking industry practically succeeded in reducing the industry-wide regulatory system, there are now fewer losses from operational risks in banks.

"In financial services, if you want to be the best in the industry, you first have to be the best in risk management. It's the foundation for every other measure of success. There's almost no room for error."

John Stumpf, chairman and CEO of Wells Fargo

Integration of ORM Strategies


Evaluate Risk Profile

Every financial institution and bank should assess their risk profile to reduce operational risks and improve information security. It should also evaluate the resilience of its business processes, map them to associated risks and controls, and build a database of potential operational risk events. To facilitate this under operational risk management, deploy analytics into the process and evaluate potential threats at a particular time. In this way, banks can minimize risk factors in the future.


Introduce Risk Indicators

Most banks examine their sales-operating models meticulously because of regulatory concerns about sales practices, such as product features, incentives, sales procedures, frontline-management routines, and customer-complaint processes.

Risk management in the banking sector can now be possible as banks can enhance their operational risk coverage with the help of the ‘three lines of defense” model. This model is widely used to define and manage operational risks. It is a solution framework that functions at a granular level to help identify and control risks. The target framework should include sources of risk that most banks lack, such as:

  • A clear definition of accountability at each level of the risk plan
  • Established levels of communication and feedback from various levels of management
  • Uniform monitoring of all potential risk exposure sources, such as portfolio management, employee tracking, or even disaster management

The key objective for banks is to move beyond legal risks and focus on all business processes to ensure they are covered fully for the future.


Initiate Training for Employees

Employees play an integral role in managing operations in banks and financial institutions. Therefore, to ensure the effectiveness of the same, employees can be given training on operational risk management programs and functions of management programs to make them aware of the potential risks and ways to overcome them. This is extremely important for those banks and financial institutions looking to launch a new customer interface, roll out new products or services, or adapt new business processes with technology implementation.


Asset Management

Asset management is one of the essential parts of operational risk management in banks and financial institutions. So, for asset management, bank managers should be concerned about two major things—the role of asset management and how to develop a good plan for managing assets. Asset management identifies and manages risks that arise when certain assets are used.

To exclude risks in bank operations, a fundamental strategic asset management plan will include the following six phases:

  • Acquisitions (including leases or rentals)
  • Operations
  • Maintenance
  • Funding
  • Risk assessment and management

After these phases have been covered, banks must count their assets. Here is the following inventory of assets that need to be included. They are:

  • Total count of assets
  • Allocated assets
  • The value of each asset
  • Details of acquired assets
  • The expected life cycles of the assets

Banks can easily implement a robust risk management plan for future safety by accessing all of them.


A Comprehensive Approach to ORM

Banks taking a comprehensive approach toward building an ORM (operational risk management) framework can bolster business growth rapidly. The first step to creating a productive ORM capability is to access the existing risk potential in banks. This would help banks create a base out of all internal and external risk events. Then, to deal with the different types of risks, the development of key risk indicators (KRI) will serve as early warning signals to potential risks. Once the banks successfully identify it, they can decide on mitigation options.

Next, the question arises, how can financial businesses and institutions establish a robust ORM for risk management in the banking sector? The key to establishing an effective ORM is training employees to anticipate future risks, especially during the launch of products, changes in customer interface, outsourcing services, or shifting the core of a business module.

As banks and other financial institutions have embraced agile work modes, ORM experts have become an integral part of the operation. Like, JPMorgan Chase, ORM lies at the heart of all its processes. It is where the bank develops and tests new business offerings and practices to check the potential risks in the following. In addition, other U.S. banks have built a dedicated cyber-risk team that simulates attacks and takes action to prevent potential operational risks.

However, identifying and alleviating operational risk is a significant and crucial task that needs to be left only to the ORM experts.


A Move Forward with the Operational Risk Management Framework

The components of risk management in banks examined above have proved beneficial for the operational risk management function.

Operational risk management in the banking sector should ensure that an institution's operational risk framework is reliably implemented and performs well. The institution should ensure that the framework provides thorough coverage across the various operational risk event types and conduct ongoing support for individual components and the overall operational risk framework.

Businesses and financial institutions should leverage the operational risk management framework as part of a broader effort to improve sustainability, including estimation of forecasting efforts. Therefore, the operational-risk discipline can create a more secure and profitable institution in the future.

"The art of banking is always to balance the risk to run with the reward of a profit”

Jamie Dimon, chairman and CEO of JPMorgan Chase

Frequently Asked Question


What are the most prominent operational risks in banks?

Process risk, systems risk, external event risk, and legal and compliance risks are the significant operational risks in banks.


What is the primary function of operational risk management?

The primary function of operational risk management is to reduce risks through risk identification, measurement and mitigation, risk assessment, monitoring and reporting.


How to identify operational risks in banks?

Banks must assess and manage operational risk using various tools and strategies. Banks identify potential operational risks in the following ways:
  • Business disruptions and systems failures
  • Accounting or data entry errors
  • Inaccurate client records

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Transforming B2B Customer Experience with Multichannel Banking Solutions

Article | June 22, 2022

Contents 1. Introduction 2. Maximizing Revenue: Cross-Selling and Upselling Strategies 3. Optimizing B2B Operations: Multichannel Banking and Cash Management Solutions 3.1 Digitizing Cash Management in Multichannel Banking: Key Imperatives 4. Leveraging Data Analytics for Multichannel Banking Optimization 5. Striking Balance between Convenience and Security 6. Multichannel Banking Evolution: Trends and Insights 7. Future Scope 1. Introduction Integrating multichannel banking solutions for a seamless customer experience remains a challenge in today’s digital era as financial institutions and banks are expected to provide services through ATMs, online banking, mobile, and in-branch. To boost efficiency and profitability, adopting multichannel payment processing is crucial. Technology enables merchants to process payments from all channels using a single account, thus, eliminating the need for multiple merchant IDs. Consolidating online sales into one location streamlines business processes, reduces card network fees, and leads to significant cost savings. 2. Maximizing Revenue: Cross-selling and Upselling Strategies Banks and financial institutions can effectively promote their multiple products and services to customers based on their needs, behavior, or demographics. Cross-selling and upselling techniques can encourage customers to hold multiple products, which can lead to business growth, new client acquisition, and increased customer lifetime value. Cross-selling involves offering related products or services to existing customers, such as promoting credit cards and internet banking to savings or current account holders. On the other hand, upselling involves increasing the amount invested in an existing or additional product. Both techniques can significantly boost sales, and revenue, and help achieve business objectives. 3. Optimizing B2B Operations: Multichannel Banking and Cash Management Solutions The evolving demands of corporate clients, rising competition from fintech companies, and the emergence of cutting-edge technologies are providing banks with a distinct prospect to revamp their cash management services and capabilities. 3.1 Digitizing Cash Management in Multichannel Banking: Key Imperatives Unlocking the Benefits of Collaboration Fintechs are becoming highly sought-after collaborators due to their product innovation, which enables banks to offer new and compelling services, solutions, and products that aid in attracting and retaining cash management clients. Tech & Alliances for Dynamic Cash Ecosystem Using innovative technologies and services, a cash management approach focuses on delivering cash efficiency and effectiveness to clients. New alliances and data-driven insights create a thriving ecosystem. Omnichannel Architecture In an omnichannel world, architecture plays a crucial role in delivering a seamless customer experience. While the traditional multichannel approach offers diverse touchpoints, it can also lead to a sub-optimal customer experience. Harnessing Real-time and Predictive Analytics In the realm of cash management, banks are increasingly relying on predictive analytics to mitigate risks, underwrite loans, and detect fraud. However, the potential advantages of real-time analytics for both cash management customers and the banks that cater to them are even more extensive. Integrate Cloud Services Compared to conventional decentralized cash management systems, cloud-based systems offer a greater degree of process and control uniformity in all scenarios, bolstering their resilience against potential capacity limitations stemming from factors such as remote work setups, cyber threats, and sudden surges in transaction volume. 4. Leveraging Data Analytics for Multichannel Banking Optimization Data-driven organizations are 23 times more likely to acquire customers, 6 times more likely to retain those customers, and 19 times more likely to be profitable (Source: McKinsey Global) Using data analytics, banks can gain insights into customer behavior, preferences, and patterns across channels. This helps identify customer needs, optimize channel usage, and personalize the banking experience. Predictive analytics can proactively offer relevant solutions to customers through their preferred channels, improving satisfaction. Banks can also optimize channel offerings by identifying the most effective channels for different customer segments, such as mobile banking for younger customers and branches for older customers. 5. Striking Balance between Convenience and Security Multichannel banking has revolutionized the way customers interact with their banks. With the advent of digital banking, customers can now carry out a wide range of transactions using multiple channels such as mobile apps, online banking, ATMs, and branches. While this has made banking more convenient, it has also created new security challenges for banks. Here are some key considerations that banks should keep in mind when implementing a multichannel banking strategy: Multi-factor Authentication: Multi-factor authentication is a crucial security measure that can help prevent unauthorized access to customer accounts. Banks can implement multi-factor authentication by requiring customers to provide two or more authentication factors such as a password, fingerprint, or facial recognition. Fraud Detection and Prevention: Banks should have robust fraud detection and prevention systems in place to identify and prevent fraudulent transactions. These systems should be designed to detect suspicious activities such as large withdrawals, multiple failed login attempts, and transactions from unusual locations. Encryption: Encryption is a critical security measure that can protect sensitive data such as customer account information and transaction details. Banks should ensure that all customer data transmitted through their multichannel banking platforms is encrypted to prevent interception by hackers. Training and Education: Banks should provide regular training and education to customers on how to use their multichannel banking platforms securely. This can include educating customers on how to create strong passwords, recognizing and reporting phishing scams, and using public Wi-Fi safely. Customer Support: Banks should have robust customer support systems in place to help customers with any issues related to their multichannel banking platforms. This can include providing support through multiple channels such as phone, email, and live chat. 6. Multichannel Banking Evolution: Trends and Insights As financial institutions continue to adjust to the ever-changing needs and preferences of their customers, it is imperative to remain informed about the latest trends and insights in multichannel banking. These critical trends and insights have played a pivotal role in shaping its evolution: Rise of Mobile Banking: The use of mobile banking apps has surged in recent years, with many customers preferring to use their smartphones for banking transactions. As a result, banks are investing in the development of robust mobile banking apps to cater to this demand. Integration of AI and Automation: Banks are increasingly using artificial intelligence (AI) and automation to streamline their operations and improve the customer experience. Chatbots and virtual assistants, for example, can provide customers with quick and personalized responses to their queries. Greater Emphasis on Data Analytics: Banks are using data analytics to gain insights into customer behavior and preferences. By analyzing customer data, banks can develop targeted marketing campaigns and offer personalized recommendations to customers. Expansion of Digital Payment Options: The growth of digital payment options such as mobile wallets and peer-to-peer (P2P) payment apps is driving the evolution of multichannel banking. Banks are partnering with fintech companies to offer these services and stay competitive in the market. Adoption of Blockchain Technology: Banks are exploring the use of blockchain technology to improve security, transparency, and efficiency in their operations. For example, blockchain can be used to facilitate cross-border payments and reduce the need for intermediaries. 7. Future Scope With advancements in technology, financial institutions can continue to offer new and innovative channels to improve the customer experience. The use of artificial intelligence and chatbots is expected to increase, allowing customers to interact with their bank through voice and text commands. The integration of internet of things (IoT) devices with banking channels is another area of potential growth. For instance, customers could use their smartwatches to make payments or check account balances. Additionally, blockchain technology has the potential to revolutionize the way banks handle transactions, reducing the risk of fraud and improving the speed and efficiency of transactions. As financial institutions continue to adapt to the changing needs and preferences of their customers, multichannel banking will play a crucial role in delivering a seamless and personalized customer experience.

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CORE BANKING

Future of Banking: Examining Components of Digital Banking

Article | July 20, 2022

Contents 1. Evolution of Banking: From Brick-and-mortar to Digital 2. Multichannel Banking and Self-service Solutions 3. Demystifying Retail, Business and Corporate Banking 4. Mobile Banking: Payment Processing Overhaul 4.1 Overview of Fintech Companies in Banking Industry 5. Technology Trends in Digital Banking 6. Digital Transformation in Banking 6.1 Authentic User Experience 6.2 Blockchain Technology 6.3 Personalized Technology Services 7. Digital Banking Platforms Reaching out to SMBs 8. Future Aspects of Digital Banking Solutions 1. Evolution of Banking: From Brick-and-mortar to Digital Digital banking has transformed the traditional banking landscape and brought about a paradigm shift in the way individuals and businesses manage their finances. The cumbersome and time-consuming nature of financial transactions that involved physical visits to bank branches and long queues for basic tasks like account opening and money transfers is now a thing of the past. Between 2017 and 2021, 9% of all branch locations closed down, a loss of around 7,500 branches, according to the non-profit National Community Reinvestment Coalition (NCRC). (Source: Bankrate) With the digitization of banking, there has been a shift toward a cashless economy, with net and mobile banking gaining popularity over physical cash. With digital banking solutions like UPI, internet banking, and mobile banking, customers can access global transaction banking services directly from their own platforms, enabling seamless transactions anytime, anywhere. 2. Multichannel Banking and Self-Service Solutions The shift from traditional brick-and-mortar banking to digital banking has become ubiquitous, making self-service approaches in digital banking solutions vital for customers. These options allow customers to access banking solutions using software resources without human intervention, enabling them to conduct transactions such as checking account balances, making online transfers and withdrawals, paying bills, loan installments, exchanging currencies, and overall managing wealth with ease. Such solutions can be accessed through FAQs, chatbots, customer support portals, and other similar resources. The scope of self-service technology also encompasses internet banking and online shopping. Although the first and most successful self-service solution introduced by banks worldwide was the automated teller machine (ATM), the concept has now been extended to include a variety of digital banking platforms and applications. 3. Demystifying Retail, Business and Corporate Banking Digital banking services and products consist of three main sub-categories: Retail banking, Business banking, and Corporate banking. Retail banking, also referred to as consumer banking or personal banking, is a form of banking that offers financial services specifically to individual customers instead of businesses. It enables customers to effectively manage their finances, access credit facilities, and securely deposit their funds. Business banking refers to a company's financial transactions with a specialized institution that offers tailored financial services such as business loans, credit, savings accounts, and checking accounts, exclusively designed for corporate entities rather than individuals. This type of banking is conducted by a dedicated business banking division within a bank, which solely caters to the financial needs of commercial organizations. Corporate banking entails the provision of financial services to sizable corporations and multinational enterprises, which includes an array of offerings such as cash management, trade finance, corporate lending, and treasury services. With the advent of digital corporate banking, businesses can now effectively manage their financial transactions, process payments, and gain access to various financial tools and resources via digital platforms, ensuring improved efficiency and convenience. 4.Mobile Banking: Payment Processing Overhaul Mobile banking allows remote access to a wide range of banking services. Mobile app simplifies our lives by letting bank and other financial institution users check account balances, pay bills, transfer money, manage investments, and apply for loans with just a few clicks. Mobile banking alerts promote smart financial management, provide customization options, and enable easy monitoring for suspicious activity. A Chase Bank study revealed that 87% of consumers use their bank's mobile app monthly. Some features of a digital banking platform: Transfer money to friends and family within minutes via the ‘Manage Payee’ option on mobile banking apps. Clear utility bills via banks linked with UPI-enabled apps on your phone instead of standing in long queues outside gas stations with cash. Open Demat accounts online via the KYC process and manage all investments, deposits, and stocks in one place. Open bank accounts by uploading documents online; skip visiting banks and filling out forms. Get online assistance from banks 24/7 through chatbots and support systems. Mobile banking enables smooth functioning and boosts transparency in accessing financial data. Check account balances anytime without the need for passbook slips. Mobile banking apps provide customers with innumerable loan options, with banks deducting loan amounts from accounts on a fixed date via the ‘AutoPay’ option. 4.1 Overview of Fintech Companies in Banking Industry Here are some leading digital banking platforms catering to the needs of financial institutions: Alkami Technology: It is a major developer of cloud-based digital banking solutions for financial institutions in the United States. Its solutions enable users to clients their businesses with confidence, react to changing circumstances swiftly, and build vibrant digital communities. The company provides a range of services, including retail banking and business banking, digital account opening, loan origination, and multi-payment fraud protection solutions to assist clients in their transformation. It is dedicated to empowering its clients and supporting them in achieving their goals. Numerated: It is a fast-growing fintech that streamlines the origination process for business banking products. Over 400,000 businesses and 30,000 financial institution associates have processed $50 billion in lending using Numerated. The platform is used by financial institutions with a combined $1 trillion in assets, including Bremer Bank, Dollar Bank, Eastern Bank, MidFirst Bank, People's United Bank, Seacoast Bank, and others. The company has been recognized for its work as one of 2020's Top 250 FinTechs by CB Insights and 2021's Best Overall Business Lending Company by FinTech Breakthrough. Zoot Enterprises: It is a global leader in providing advanced origination, acquisition, and decision management solutions to financial institutions. Its cloud-based platforms offer flexibility for specific business needs, including loan origination, fraud detection, and data acquisition. Zoot enables clients to access hundreds of cutting-edge data sources in real time, delivering decisions in milliseconds. Its origination solution streamlines loan processing, providing powerful tools and robust integrations that reduce data entry, accelerate loan processing times, and avoid costly errors. Geezeo: The company delivers enriched digital banking experiences, processing, and augmenting transactions for over 500 financial institutions. Its insights enhance the overall customer experience, seamlessly integrating within online and mobile banking environments while allowing financial institutions to maintain ownership of their personal financial management (PFM) brand. It focuses on technology solutions that engage audiences with enriched data and offers expertise in digital banking, marketing, and technology. TurnKey Lender: It is a global leader in Unified Lending Management (ULM). Its intelligent software products automate the entire lending process, including traditional and alternative lending, SME financing, grant management, money lending, leasing, trade finance, in-house financing, and more. With customers in over 50 countries, TurnKey Lender is gaining traction as a pioneer in AI software development for lenders in regions like the United States, APAC, and the EU. The company’s solutions are used by all types of lenders, including large/mid-size banks, digital lenders, multi-finance companies, trade finance operators, traditional and non-traditional lenders, and telecoms. 5. Technology Trends in Digital Banking Banking technology is rapidly evolving. Advanced technologies like AI and ML will enable banks to analyze large data sets in real time and offer personalized solutions to customers. The market size of the global digital banking platform was valued at USD 20.8 billion in 2021 and is expected to expand at a CAGR of 20.5% from 2022 to 2030. (Source: Grand View Research) The increasing digital savviness of the global population is prompting the adoption of technological advancements. However, some individuals are still in an adaptive mode due to a lack of time and knowledge. AI and ML technologies enable banks to analyze large amounts of data, make informed decisions through predictive analysis, and improve lending patterns by analyzing consumer spending patterns. 6.Digital Transformation in Banking Financial institutions must leverage big data to automate business processes and reduce costs in light of falling interest rates and banking fees coupled with rising consumer demands. Adopting artificial intelligence, cloud technology, and automation in modernizing their applications could enable banks to develop omnichannel products, services, and capabilities, ultimately improving the user experience. Now, let's examine digital transformation in the banking industry: 6.1 Authentic User Experience (UX) Banks must share genuine customer experiences to retain loyalty. To achieve this, they must embrace the latest trends, technologies, and well-designed UX. 6.2Blockchain Technology To improve customer satisfaction, banks must reduce the intermediaries between them and their customers. This can be accomplished through increased transparency using blockchain technology, enabling untrusted parties to agree on a shared database and eliminating the need for transaction intermediaries. 6.3 Personalized Technical Services Key points about the benefits of personalized services such as automation, AI, and cloud computing in the banking industry: Automation minimizes human intervention and reduces errors, resulting in faster and more efficient service. AI helps banks predict outcomes based on past data, such as identifying fraud and making customer recommendations. Cloud computing enables banks to adopt new business models and create secure applications that meet regulatory requirements. About 27% of Americans use an online-only bank. Of those at online-only banks, 88% reported they are satisfied with the bank’s services. Meanwhile, only 66% of consumers using traditional banks report being satisfied with them. (Source: Bankrate) 7. Digital Banking Platforms Reaching Out to SMBs Digital banking platforms have revolutionized business operations by providing enhanced convenience and adaptability. Fintech firms have customized their platforms to meet the unique needs of small and medium-sized businesses (SMBs), offering mobile apps that facilitate financial management, transaction processing, and access to a range of financial tools and services at all times and from any location. The following is a list of notable digital banking applications that have garnered significant popularity over time: Betterment: It is an online financial advisor that offers personalized, fiduciary advice for retirement planning, building wealth, and achieving financial goals. By utilizing advanced algorithms and technology, it offers automated investment services that are tailored to each client's unique investment objectives and risk tolerance. The platform offers a diverse range of investment options, low fees, tax-efficient investing, and access to financial advisors. Betterment's mission is to make investing accessible and affordable to everyone, with a user-friendly online platform that is easy to use and offers high-quality investment advice. Mercury: It is a startup-focused banking platform that provides a comprehensive range of financial services tailored to companies of any size or stage. The platform offers free checking and savings accounts, debit and credit cards, domestic and international wire transfers, treasury and venture debt, and other essential financial products, all with an intuitive user experience. In addition to its suite of banking services, Mercury also provides vibrant community programs that offer founders the resources, advice, and connections needed to build successful companies. Bluevine: It is a financial technology company that specializes in providing working capital financing solutions tailored to small and medium-sized businesses (SMBs) in the United States. With a suite of financing products, including invoice factoring, lines of credit, and term loans, Bluevine enables SMBs to secure the necessary funding to drive growth and expansion. The company's platform is designed to facilitate a seamless lending experience, with streamlined applications and fast approvals that can be completed in as little as 10 minutes. Novo: New York-based fintech firm, Novo offers digital banking services to small businesses in the United States. Its suite of products includes mobile check deposit, online bill pay, and debit card issuance for employees. The company has also integrated with popular small business software tools such as QuickBooks and Xero, providing businesses with greater financial management capabilities. Relay: Relay is an online banking and money management platform dedicated to giving America's small businesses the tools they need to grow and gain visibility into their finances. The company recognizes that traditional banking services often underserve small businesses. As a result, it has built a platform that gives entrepreneurs the power to control their cash flow by giving them a clear picture of their income and expenses. 8. Future Aspects of Digital Banking Solutions As technology continues to advance, the traditional banking system is expected to undergo significant changes in the coming decades, with neobanks rapidly gaining popularity among tech-savvy customers for their personalized services. These digital fintech companies, often referred to as 'challenger banks', operate without physical branches and offer a range of attractive services, blurring the line between traditional banking and financial systems. As a result, retail banks may adopt an omnichannel approach and leverage the robust infrastructure of fintech enterprises to enhance the customer experience.

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CORE BANKING, FINTECH

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

Article | March 28, 2023

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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BIG TECH IN FINANCE: A DEEP DIVE INTO THE FUTURE OF FINTECH

Article | February 10, 2020

The following article looks at Big Tech and its impact on the financial services sector. Whilst competition from small fintech startups will certainly take away some market share from traditional banks, the impact of “GAFA” could be huge. The fintech movement did more than unbundle banking and its core services — it spurred financial inclusion across Asia, increased overall economic growth, and made significant inroads into the finance value chain. The born-digital companies brought technology to the forefront, attacking the traditional risk-averse sector from various points — digital payments, insurance, P2P lending, and investment management, among other avenues.

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CORE BANKING, FINTECH

3 Reasons CFOs Should Care About Investing in Cloud Based Banking

Article | June 22, 2022

Contents 1. Introduction 2. Maximizing Revenue: Cross-Selling and Upselling Strategies 3. Optimizing B2B Operations: Multichannel Banking and Cash Management Solutions 3.1 Digitizing Cash Management in Multichannel Banking: Key Imperatives 4. Leveraging Data Analytics for Multichannel Banking Optimization 5. Striking Balance between Convenience and Security 6. Multichannel Banking Evolution: Trends and Insights 7. Future Scope 1. Introduction Integrating multichannel banking solutions for a seamless customer experience remains a challenge in today’s digital era as financial institutions and banks are expected to provide services through ATMs, online banking, mobile, and in-branch. To boost efficiency and profitability, adopting multichannel payment processing is crucial. Technology enables merchants to process payments from all channels using a single account, thus, eliminating the need for multiple merchant IDs. Consolidating online sales into one location streamlines business processes, reduces card network fees, and leads to significant cost savings. 2. Maximizing Revenue: Cross-selling and Upselling Strategies Banks and financial institutions can effectively promote their multiple products and services to customers based on their needs, behavior, or demographics. Cross-selling and upselling techniques can encourage customers to hold multiple products, which can lead to business growth, new client acquisition, and increased customer lifetime value. Cross-selling involves offering related products or services to existing customers, such as promoting credit cards and internet banking to savings or current account holders. On the other hand, upselling involves increasing the amount invested in an existing or additional product. Both techniques can significantly boost sales, and revenue, and help achieve business objectives. 3. Optimizing B2B Operations: Multichannel Banking and Cash Management Solutions The evolving demands of corporate clients, rising competition from fintech companies, and the emergence of cutting-edge technologies are providing banks with a distinct prospect to revamp their cash management services and capabilities. 3.1 Digitizing Cash Management in Multichannel Banking: Key Imperatives Unlocking the Benefits of Collaboration Fintechs are becoming highly sought-after collaborators due to their product innovation, which enables banks to offer new and compelling services, solutions, and products that aid in attracting and retaining cash management clients. Tech & Alliances for Dynamic Cash Ecosystem Using innovative technologies and services, a cash management approach focuses on delivering cash efficiency and effectiveness to clients. New alliances and data-driven insights create a thriving ecosystem. Omnichannel Architecture In an omnichannel world, architecture plays a crucial role in delivering a seamless customer experience. While the traditional multichannel approach offers diverse touchpoints, it can also lead to a sub-optimal customer experience. Harnessing Real-time and Predictive Analytics In the realm of cash management, banks are increasingly relying on predictive analytics to mitigate risks, underwrite loans, and detect fraud. However, the potential advantages of real-time analytics for both cash management customers and the banks that cater to them are even more extensive. Integrate Cloud Services Compared to conventional decentralized cash management systems, cloud-based systems offer a greater degree of process and control uniformity in all scenarios, bolstering their resilience against potential capacity limitations stemming from factors such as remote work setups, cyber threats, and sudden surges in transaction volume. 4. Leveraging Data Analytics for Multichannel Banking Optimization Data-driven organizations are 23 times more likely to acquire customers, 6 times more likely to retain those customers, and 19 times more likely to be profitable (Source: McKinsey Global) Using data analytics, banks can gain insights into customer behavior, preferences, and patterns across channels. This helps identify customer needs, optimize channel usage, and personalize the banking experience. Predictive analytics can proactively offer relevant solutions to customers through their preferred channels, improving satisfaction. Banks can also optimize channel offerings by identifying the most effective channels for different customer segments, such as mobile banking for younger customers and branches for older customers. 5. Striking Balance between Convenience and Security Multichannel banking has revolutionized the way customers interact with their banks. With the advent of digital banking, customers can now carry out a wide range of transactions using multiple channels such as mobile apps, online banking, ATMs, and branches. While this has made banking more convenient, it has also created new security challenges for banks. Here are some key considerations that banks should keep in mind when implementing a multichannel banking strategy: Multi-factor Authentication: Multi-factor authentication is a crucial security measure that can help prevent unauthorized access to customer accounts. Banks can implement multi-factor authentication by requiring customers to provide two or more authentication factors such as a password, fingerprint, or facial recognition. Fraud Detection and Prevention: Banks should have robust fraud detection and prevention systems in place to identify and prevent fraudulent transactions. These systems should be designed to detect suspicious activities such as large withdrawals, multiple failed login attempts, and transactions from unusual locations. Encryption: Encryption is a critical security measure that can protect sensitive data such as customer account information and transaction details. Banks should ensure that all customer data transmitted through their multichannel banking platforms is encrypted to prevent interception by hackers. Training and Education: Banks should provide regular training and education to customers on how to use their multichannel banking platforms securely. This can include educating customers on how to create strong passwords, recognizing and reporting phishing scams, and using public Wi-Fi safely. Customer Support: Banks should have robust customer support systems in place to help customers with any issues related to their multichannel banking platforms. This can include providing support through multiple channels such as phone, email, and live chat. 6. Multichannel Banking Evolution: Trends and Insights As financial institutions continue to adjust to the ever-changing needs and preferences of their customers, it is imperative to remain informed about the latest trends and insights in multichannel banking. These critical trends and insights have played a pivotal role in shaping its evolution: Rise of Mobile Banking: The use of mobile banking apps has surged in recent years, with many customers preferring to use their smartphones for banking transactions. As a result, banks are investing in the development of robust mobile banking apps to cater to this demand. Integration of AI and Automation: Banks are increasingly using artificial intelligence (AI) and automation to streamline their operations and improve the customer experience. Chatbots and virtual assistants, for example, can provide customers with quick and personalized responses to their queries. Greater Emphasis on Data Analytics: Banks are using data analytics to gain insights into customer behavior and preferences. By analyzing customer data, banks can develop targeted marketing campaigns and offer personalized recommendations to customers. Expansion of Digital Payment Options: The growth of digital payment options such as mobile wallets and peer-to-peer (P2P) payment apps is driving the evolution of multichannel banking. Banks are partnering with fintech companies to offer these services and stay competitive in the market. Adoption of Blockchain Technology: Banks are exploring the use of blockchain technology to improve security, transparency, and efficiency in their operations. For example, blockchain can be used to facilitate cross-border payments and reduce the need for intermediaries. 7. Future Scope With advancements in technology, financial institutions can continue to offer new and innovative channels to improve the customer experience. The use of artificial intelligence and chatbots is expected to increase, allowing customers to interact with their bank through voice and text commands. The integration of internet of things (IoT) devices with banking channels is another area of potential growth. For instance, customers could use their smartwatches to make payments or check account balances. Additionally, blockchain technology has the potential to revolutionize the way banks handle transactions, reducing the risk of fraud and improving the speed and efficiency of transactions. As financial institutions continue to adapt to the changing needs and preferences of their customers, multichannel banking will play a crucial role in delivering a seamless and personalized customer experience.

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CORE BANKING

4 Ways CFOs Can Prepare for a Dynamic New Normal

Article | July 20, 2022

Contents 1. Evolution of Banking: From Brick-and-mortar to Digital 2. Multichannel Banking and Self-service Solutions 3. Demystifying Retail, Business and Corporate Banking 4. Mobile Banking: Payment Processing Overhaul 4.1 Overview of Fintech Companies in Banking Industry 5. Technology Trends in Digital Banking 6. Digital Transformation in Banking 6.1 Authentic User Experience 6.2 Blockchain Technology 6.3 Personalized Technology Services 7. Digital Banking Platforms Reaching out to SMBs 8. Future Aspects of Digital Banking Solutions 1. Evolution of Banking: From Brick-and-mortar to Digital Digital banking has transformed the traditional banking landscape and brought about a paradigm shift in the way individuals and businesses manage their finances. The cumbersome and time-consuming nature of financial transactions that involved physical visits to bank branches and long queues for basic tasks like account opening and money transfers is now a thing of the past. Between 2017 and 2021, 9% of all branch locations closed down, a loss of around 7,500 branches, according to the non-profit National Community Reinvestment Coalition (NCRC). (Source: Bankrate) With the digitization of banking, there has been a shift toward a cashless economy, with net and mobile banking gaining popularity over physical cash. With digital banking solutions like UPI, internet banking, and mobile banking, customers can access global transaction banking services directly from their own platforms, enabling seamless transactions anytime, anywhere. 2. Multichannel Banking and Self-Service Solutions The shift from traditional brick-and-mortar banking to digital banking has become ubiquitous, making self-service approaches in digital banking solutions vital for customers. These options allow customers to access banking solutions using software resources without human intervention, enabling them to conduct transactions such as checking account balances, making online transfers and withdrawals, paying bills, loan installments, exchanging currencies, and overall managing wealth with ease. Such solutions can be accessed through FAQs, chatbots, customer support portals, and other similar resources. The scope of self-service technology also encompasses internet banking and online shopping. Although the first and most successful self-service solution introduced by banks worldwide was the automated teller machine (ATM), the concept has now been extended to include a variety of digital banking platforms and applications. 3. Demystifying Retail, Business and Corporate Banking Digital banking services and products consist of three main sub-categories: Retail banking, Business banking, and Corporate banking. Retail banking, also referred to as consumer banking or personal banking, is a form of banking that offers financial services specifically to individual customers instead of businesses. It enables customers to effectively manage their finances, access credit facilities, and securely deposit their funds. Business banking refers to a company's financial transactions with a specialized institution that offers tailored financial services such as business loans, credit, savings accounts, and checking accounts, exclusively designed for corporate entities rather than individuals. This type of banking is conducted by a dedicated business banking division within a bank, which solely caters to the financial needs of commercial organizations. Corporate banking entails the provision of financial services to sizable corporations and multinational enterprises, which includes an array of offerings such as cash management, trade finance, corporate lending, and treasury services. With the advent of digital corporate banking, businesses can now effectively manage their financial transactions, process payments, and gain access to various financial tools and resources via digital platforms, ensuring improved efficiency and convenience. 4.Mobile Banking: Payment Processing Overhaul Mobile banking allows remote access to a wide range of banking services. Mobile app simplifies our lives by letting bank and other financial institution users check account balances, pay bills, transfer money, manage investments, and apply for loans with just a few clicks. Mobile banking alerts promote smart financial management, provide customization options, and enable easy monitoring for suspicious activity. A Chase Bank study revealed that 87% of consumers use their bank's mobile app monthly. Some features of a digital banking platform: Transfer money to friends and family within minutes via the ‘Manage Payee’ option on mobile banking apps. Clear utility bills via banks linked with UPI-enabled apps on your phone instead of standing in long queues outside gas stations with cash. Open Demat accounts online via the KYC process and manage all investments, deposits, and stocks in one place. Open bank accounts by uploading documents online; skip visiting banks and filling out forms. Get online assistance from banks 24/7 through chatbots and support systems. Mobile banking enables smooth functioning and boosts transparency in accessing financial data. Check account balances anytime without the need for passbook slips. Mobile banking apps provide customers with innumerable loan options, with banks deducting loan amounts from accounts on a fixed date via the ‘AutoPay’ option. 4.1 Overview of Fintech Companies in Banking Industry Here are some leading digital banking platforms catering to the needs of financial institutions: Alkami Technology: It is a major developer of cloud-based digital banking solutions for financial institutions in the United States. Its solutions enable users to clients their businesses with confidence, react to changing circumstances swiftly, and build vibrant digital communities. The company provides a range of services, including retail banking and business banking, digital account opening, loan origination, and multi-payment fraud protection solutions to assist clients in their transformation. It is dedicated to empowering its clients and supporting them in achieving their goals. Numerated: It is a fast-growing fintech that streamlines the origination process for business banking products. Over 400,000 businesses and 30,000 financial institution associates have processed $50 billion in lending using Numerated. The platform is used by financial institutions with a combined $1 trillion in assets, including Bremer Bank, Dollar Bank, Eastern Bank, MidFirst Bank, People's United Bank, Seacoast Bank, and others. The company has been recognized for its work as one of 2020's Top 250 FinTechs by CB Insights and 2021's Best Overall Business Lending Company by FinTech Breakthrough. Zoot Enterprises: It is a global leader in providing advanced origination, acquisition, and decision management solutions to financial institutions. Its cloud-based platforms offer flexibility for specific business needs, including loan origination, fraud detection, and data acquisition. Zoot enables clients to access hundreds of cutting-edge data sources in real time, delivering decisions in milliseconds. Its origination solution streamlines loan processing, providing powerful tools and robust integrations that reduce data entry, accelerate loan processing times, and avoid costly errors. Geezeo: The company delivers enriched digital banking experiences, processing, and augmenting transactions for over 500 financial institutions. Its insights enhance the overall customer experience, seamlessly integrating within online and mobile banking environments while allowing financial institutions to maintain ownership of their personal financial management (PFM) brand. It focuses on technology solutions that engage audiences with enriched data and offers expertise in digital banking, marketing, and technology. TurnKey Lender: It is a global leader in Unified Lending Management (ULM). Its intelligent software products automate the entire lending process, including traditional and alternative lending, SME financing, grant management, money lending, leasing, trade finance, in-house financing, and more. With customers in over 50 countries, TurnKey Lender is gaining traction as a pioneer in AI software development for lenders in regions like the United States, APAC, and the EU. The company’s solutions are used by all types of lenders, including large/mid-size banks, digital lenders, multi-finance companies, trade finance operators, traditional and non-traditional lenders, and telecoms. 5. Technology Trends in Digital Banking Banking technology is rapidly evolving. Advanced technologies like AI and ML will enable banks to analyze large data sets in real time and offer personalized solutions to customers. The market size of the global digital banking platform was valued at USD 20.8 billion in 2021 and is expected to expand at a CAGR of 20.5% from 2022 to 2030. (Source: Grand View Research) The increasing digital savviness of the global population is prompting the adoption of technological advancements. However, some individuals are still in an adaptive mode due to a lack of time and knowledge. AI and ML technologies enable banks to analyze large amounts of data, make informed decisions through predictive analysis, and improve lending patterns by analyzing consumer spending patterns. 6.Digital Transformation in Banking Financial institutions must leverage big data to automate business processes and reduce costs in light of falling interest rates and banking fees coupled with rising consumer demands. Adopting artificial intelligence, cloud technology, and automation in modernizing their applications could enable banks to develop omnichannel products, services, and capabilities, ultimately improving the user experience. Now, let's examine digital transformation in the banking industry: 6.1 Authentic User Experience (UX) Banks must share genuine customer experiences to retain loyalty. To achieve this, they must embrace the latest trends, technologies, and well-designed UX. 6.2Blockchain Technology To improve customer satisfaction, banks must reduce the intermediaries between them and their customers. This can be accomplished through increased transparency using blockchain technology, enabling untrusted parties to agree on a shared database and eliminating the need for transaction intermediaries. 6.3 Personalized Technical Services Key points about the benefits of personalized services such as automation, AI, and cloud computing in the banking industry: Automation minimizes human intervention and reduces errors, resulting in faster and more efficient service. AI helps banks predict outcomes based on past data, such as identifying fraud and making customer recommendations. Cloud computing enables banks to adopt new business models and create secure applications that meet regulatory requirements. About 27% of Americans use an online-only bank. Of those at online-only banks, 88% reported they are satisfied with the bank’s services. Meanwhile, only 66% of consumers using traditional banks report being satisfied with them. (Source: Bankrate) 7. Digital Banking Platforms Reaching Out to SMBs Digital banking platforms have revolutionized business operations by providing enhanced convenience and adaptability. Fintech firms have customized their platforms to meet the unique needs of small and medium-sized businesses (SMBs), offering mobile apps that facilitate financial management, transaction processing, and access to a range of financial tools and services at all times and from any location. The following is a list of notable digital banking applications that have garnered significant popularity over time: Betterment: It is an online financial advisor that offers personalized, fiduciary advice for retirement planning, building wealth, and achieving financial goals. By utilizing advanced algorithms and technology, it offers automated investment services that are tailored to each client's unique investment objectives and risk tolerance. The platform offers a diverse range of investment options, low fees, tax-efficient investing, and access to financial advisors. Betterment's mission is to make investing accessible and affordable to everyone, with a user-friendly online platform that is easy to use and offers high-quality investment advice. Mercury: It is a startup-focused banking platform that provides a comprehensive range of financial services tailored to companies of any size or stage. The platform offers free checking and savings accounts, debit and credit cards, domestic and international wire transfers, treasury and venture debt, and other essential financial products, all with an intuitive user experience. In addition to its suite of banking services, Mercury also provides vibrant community programs that offer founders the resources, advice, and connections needed to build successful companies. Bluevine: It is a financial technology company that specializes in providing working capital financing solutions tailored to small and medium-sized businesses (SMBs) in the United States. With a suite of financing products, including invoice factoring, lines of credit, and term loans, Bluevine enables SMBs to secure the necessary funding to drive growth and expansion. The company's platform is designed to facilitate a seamless lending experience, with streamlined applications and fast approvals that can be completed in as little as 10 minutes. Novo: New York-based fintech firm, Novo offers digital banking services to small businesses in the United States. Its suite of products includes mobile check deposit, online bill pay, and debit card issuance for employees. The company has also integrated with popular small business software tools such as QuickBooks and Xero, providing businesses with greater financial management capabilities. Relay: Relay is an online banking and money management platform dedicated to giving America's small businesses the tools they need to grow and gain visibility into their finances. The company recognizes that traditional banking services often underserve small businesses. As a result, it has built a platform that gives entrepreneurs the power to control their cash flow by giving them a clear picture of their income and expenses. 8. Future Aspects of Digital Banking Solutions As technology continues to advance, the traditional banking system is expected to undergo significant changes in the coming decades, with neobanks rapidly gaining popularity among tech-savvy customers for their personalized services. These digital fintech companies, often referred to as 'challenger banks', operate without physical branches and offer a range of attractive services, blurring the line between traditional banking and financial systems. As a result, retail banks may adopt an omnichannel approach and leverage the robust infrastructure of fintech enterprises to enhance the customer experience.

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CORE BANKING, FINTECH

Transforming B2B Customer Experience with Multichannel Banking Solutions

Article | March 28, 2023

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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BIG TECH IN FINANCE: A DEEP DIVE INTO THE FUTURE OF FINTECH

Article | February 10, 2020

The following article looks at Big Tech and its impact on the financial services sector. Whilst competition from small fintech startups will certainly take away some market share from traditional banks, the impact of “GAFA” could be huge. The fintech movement did more than unbundle banking and its core services — it spurred financial inclusion across Asia, increased overall economic growth, and made significant inroads into the finance value chain. The born-digital companies brought technology to the forefront, attacking the traditional risk-averse sector from various points — digital payments, insurance, P2P lending, and investment management, among other avenues.

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FINANCIAL MANAGEMENT, FINTECH

Abrigo partners with Charm Solutions to launch AI-powered engine that accelerates SMB lending decisions

PRnewswire | March 24, 2023

Abrigo, the leading technology provider of compliance, credit risk, and lending solutions for financial institutions, today announced the launch of Abrigo Small Business Lending Intelligence. This lending decision and monitoring engine is powered by Charm Solutions, a provider of AI technology that helps financial institutions unlock the full potential of their data, identify growth opportunities, optimize operations, and improve financial decisions. According to FFIEC call report data, small business (SMB) loans made by banks in the U.S. grew to nearly 27 million in 2022. Many institutions have indicated that SMB is a continued, targeted area for growth in 2023, following the successful Paycheck Protection Program during COVID-19, which led many lenders to build or deepen relationships with SMBs in their communities. A barrier to growth for many institutions is efficiency. In a recent Abrigo survey, nearly 60% of financial institutions indicated that efficiency was the top challenge in small business lending. Abrigo Small Business Lending Intelligence is embedded into the Abrigo loan origination platform and provides real-time scorecards that include a loan risk rating score, probability of default, and details of how the score was calculated. Using Charm's dynamic models along with existing processes, institutions can improve their decision-making by incorporating an array of data sources and leveraging analytics to gain actionable insights. The engine leverages self-learning AI to continuously monitor a wide range of current and historical data, loan performance, accounting, and macroeconomic data from more than 1,200 institutions. Abrigo Small Business Lending Intelligence is transparent, providing institutions insight into the data and processes used for its scoring model. Abrigo Small Business Lending Intelligence also provides an early warning system alerting banks to changes that may impact an institution's entire loan portfolio before they become an issue. "By leveraging the power of automation and AI, financial institutions can provide the small businesses in their communities with the funds they need faster while ensuring they have the right risk management controls in place for their lending processes," said Ravi Nemalikanti, CTO of Abrigo. "We are very pleased to partner with Charm to develop this innovative solution that advances our mission to help communities thrive." "We are proud to power the Abrigo Small Business Intelligence platform with our proprietary AI-technology and help thousands of financial institutions make faster and better decisions to grow their SMB loan portfolio profitably and move the economy forward," said Jacob Malmborg, CEO of Charm Solutions. About Charm Solutions Charm Solutions is an AI software platform used by leading lending institutions to quickly and transparently analyze, decision, and monitor SMB loans, and by SMBs to gain insights into their financial health and use Charm's proprietary SMB Score™ report to receive actionable recommendations and efficiently secure the best financing alternatives to grow their business. Learn more at www.charmsolutions.ai About Abrigo Abrigo is a leading provider of compliance, credit risk, lending, and asset/liability management solutions and services that help financial institutions thrive. Abrigo accelerates growth, increases client efficiency, and improves customer experience with an easy-to-use and expansive platform. We ensure customer success with our award-winning client service team, advisory expertise, and innovative technology. With a network of 2,400+ FIs, Abrigo offers unique opportunities for insightful peer benchmarks and best practices. Visit abrigo.com to learn more. Follow Abrigo on social media using @WeAreAbrigo.

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FINANCIAL MANAGEMENT, FINTECH

Nuvei Expands Globally with Australia Launch

Nuvei | March 06, 2023

Canadian financial technology firm Nuvei Corporation announced on March 5, 2023, that its market-leading payments solutions, which include acquiring, processing, alternative payment methods, and risk management, are now available to Australian firms. Nuvei's cutting-edge, agile technology is designed to accelerate the growth of Australian businesses both locally and globally. Its payments platform enables businesses to reduce operating expenses while increasing conversion rates by increasing payment acceptance, lowering risk, and improving the consumer payment experience. This involves providing all available local and appropriate payment methods. Meanwhile, after the successful launches in Singapore and Hong Kong in 2022, Nuvei is expanding its footprint and capabilities in the Asia-Pacific (APAC) region with the launch in Australia. Regarding the announcement, Nuvei CEO Philip Fayer stated, "Our mission is to help our customers connect with their customers regardless of location, payment method or currency. Launching in Australia is a natural step for our continued expansion in APAC, having already established a strong and growing presence in the region." (Source – GlobeNewswire) Australians prefer debit and credit card purchases online, although alternative payment mechanisms (APMs) are gaining traction. In addition to card acquiring, Nuvei technology lets businesses accept all regional payment methods, including local currencies, for cross-border transactions. Australia's account-to-account quick payments open access infrastructure, the New Payments Platform (NPP), gives consumers new payment options. The consumer benefits of NPP include fast settlements that can happen 24/7/365. This makes this payment method ideal for companies where payouts are vital to the whole payment experience. Australia is a prominent eCommerce market in Asia and globally. It had the world's 12th largest economy and a $47 billion eCommerce market (8.9% growth) in 2022. Internet penetration in Australia is 91%, with over 90% of internet users making online purchases. About Nuvei Nuvei, a Canadian financial firm, accelerates client enterprises globally. Its modular, customizable, and scalable platform lets big companies accept next-generation payments, offer all payout options, and use card issuing, banking, risk, and fraud management services. The company connects businesses and customers in over 200 markets, with local buying in over 45 countries, 150 currencies, and more than 580 other ways to pay.

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FINANCIAL MANAGEMENT, INVESTMENTS

Baker Hill Teams With Alloy to Check More Loan Applicants and Reduce

Baker Hill and Alloy | March 01, 2023

On February 28, 2023, Baker Hill, one of the leading financial technology providers of loan origination, risk management, and analytics solutions, announced that it has partnered with Alloy, an identity decisioning platform, to assist financial institutions in digitally verifying more prospective borrowers and ensuring compliance throughout the loan origination process. As a result of the collaboration, financial institutions utilizing Baker Hill NextGen® can take advantage of Alloy Onboarding's single-API identity decisioning platform, which integrates various data sources into individualized workflows throughout the account opening process. Hence, financial institutions can meet KYC as well as AML standards and verify borrowers rapidly and correctly with fewer manual reviews and less fraud. Baker Hill's banking clients have more options for fraud protection and identification solutions because of Alloy's integrations with more than 170 data sources used in the loan origination process. In addition, community banks no longer have to rely on code or expensive programming to make changes since Alloy makes adding new data sources or tweaking operations simple. Mike Horrocks, Vice President of Product Management at Baker Hill, stated, "There's been nearly a 7 percent increase in lending fraud among small and midsize businesses since 2020 and according to a 2021 report by Aite-Novarica Group, only 31 percent of lending institutions had negligible rates of fraud incidence." He continued, "At the same time, many community banks and credit unions are focused on lending outside of their traditional markets to expand their reach, which can expose these institutions to added risk. By partnering with Alloy, Baker Hill helps minimize risk and time spent on manual reviews so financial institutions can generate loan growth with confidence, even in new markets." (Source – Cision PR Newswire) About Baker Hill Baker Hill's business is to develop loan origination by combining technology and financial skills. NextGen® is a flexible, single-platform SaaS solution for commercial, small business, and consumer loan origination that controls risk from request to renewal. The organization was founded on decades of partnering with banks and credit unions to deliver critical resources to local communities. About Alloy Over 300 different businesses use Alloy's API-based platform because it allows them to connect to more than 160 different data sources, automate identity choices during account origination, and monitor these processes continuously. The company has enabled some of the most cutting-edge banks and fastest-growing fintech startups to expand and scale without increasing their exposure to fraud by connecting them with more qualified clients.

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FINANCIAL MANAGEMENT, FINTECH

Abrigo partners with Charm Solutions to launch AI-powered engine that accelerates SMB lending decisions

PRnewswire | March 24, 2023

Abrigo, the leading technology provider of compliance, credit risk, and lending solutions for financial institutions, today announced the launch of Abrigo Small Business Lending Intelligence. This lending decision and monitoring engine is powered by Charm Solutions, a provider of AI technology that helps financial institutions unlock the full potential of their data, identify growth opportunities, optimize operations, and improve financial decisions. According to FFIEC call report data, small business (SMB) loans made by banks in the U.S. grew to nearly 27 million in 2022. Many institutions have indicated that SMB is a continued, targeted area for growth in 2023, following the successful Paycheck Protection Program during COVID-19, which led many lenders to build or deepen relationships with SMBs in their communities. A barrier to growth for many institutions is efficiency. In a recent Abrigo survey, nearly 60% of financial institutions indicated that efficiency was the top challenge in small business lending. Abrigo Small Business Lending Intelligence is embedded into the Abrigo loan origination platform and provides real-time scorecards that include a loan risk rating score, probability of default, and details of how the score was calculated. Using Charm's dynamic models along with existing processes, institutions can improve their decision-making by incorporating an array of data sources and leveraging analytics to gain actionable insights. The engine leverages self-learning AI to continuously monitor a wide range of current and historical data, loan performance, accounting, and macroeconomic data from more than 1,200 institutions. Abrigo Small Business Lending Intelligence is transparent, providing institutions insight into the data and processes used for its scoring model. Abrigo Small Business Lending Intelligence also provides an early warning system alerting banks to changes that may impact an institution's entire loan portfolio before they become an issue. "By leveraging the power of automation and AI, financial institutions can provide the small businesses in their communities with the funds they need faster while ensuring they have the right risk management controls in place for their lending processes," said Ravi Nemalikanti, CTO of Abrigo. "We are very pleased to partner with Charm to develop this innovative solution that advances our mission to help communities thrive." "We are proud to power the Abrigo Small Business Intelligence platform with our proprietary AI-technology and help thousands of financial institutions make faster and better decisions to grow their SMB loan portfolio profitably and move the economy forward," said Jacob Malmborg, CEO of Charm Solutions. About Charm Solutions Charm Solutions is an AI software platform used by leading lending institutions to quickly and transparently analyze, decision, and monitor SMB loans, and by SMBs to gain insights into their financial health and use Charm's proprietary SMB Score™ report to receive actionable recommendations and efficiently secure the best financing alternatives to grow their business. Learn more at www.charmsolutions.ai About Abrigo Abrigo is a leading provider of compliance, credit risk, lending, and asset/liability management solutions and services that help financial institutions thrive. Abrigo accelerates growth, increases client efficiency, and improves customer experience with an easy-to-use and expansive platform. We ensure customer success with our award-winning client service team, advisory expertise, and innovative technology. With a network of 2,400+ FIs, Abrigo offers unique opportunities for insightful peer benchmarks and best practices. Visit abrigo.com to learn more. Follow Abrigo on social media using @WeAreAbrigo.

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FINANCIAL MANAGEMENT, FINTECH

Nuvei Expands Globally with Australia Launch

Nuvei | March 06, 2023

Canadian financial technology firm Nuvei Corporation announced on March 5, 2023, that its market-leading payments solutions, which include acquiring, processing, alternative payment methods, and risk management, are now available to Australian firms. Nuvei's cutting-edge, agile technology is designed to accelerate the growth of Australian businesses both locally and globally. Its payments platform enables businesses to reduce operating expenses while increasing conversion rates by increasing payment acceptance, lowering risk, and improving the consumer payment experience. This involves providing all available local and appropriate payment methods. Meanwhile, after the successful launches in Singapore and Hong Kong in 2022, Nuvei is expanding its footprint and capabilities in the Asia-Pacific (APAC) region with the launch in Australia. Regarding the announcement, Nuvei CEO Philip Fayer stated, "Our mission is to help our customers connect with their customers regardless of location, payment method or currency. Launching in Australia is a natural step for our continued expansion in APAC, having already established a strong and growing presence in the region." (Source – GlobeNewswire) Australians prefer debit and credit card purchases online, although alternative payment mechanisms (APMs) are gaining traction. In addition to card acquiring, Nuvei technology lets businesses accept all regional payment methods, including local currencies, for cross-border transactions. Australia's account-to-account quick payments open access infrastructure, the New Payments Platform (NPP), gives consumers new payment options. The consumer benefits of NPP include fast settlements that can happen 24/7/365. This makes this payment method ideal for companies where payouts are vital to the whole payment experience. Australia is a prominent eCommerce market in Asia and globally. It had the world's 12th largest economy and a $47 billion eCommerce market (8.9% growth) in 2022. Internet penetration in Australia is 91%, with over 90% of internet users making online purchases. About Nuvei Nuvei, a Canadian financial firm, accelerates client enterprises globally. Its modular, customizable, and scalable platform lets big companies accept next-generation payments, offer all payout options, and use card issuing, banking, risk, and fraud management services. The company connects businesses and customers in over 200 markets, with local buying in over 45 countries, 150 currencies, and more than 580 other ways to pay.

Read More

FINANCIAL MANAGEMENT, INVESTMENTS

Baker Hill Teams With Alloy to Check More Loan Applicants and Reduce

Baker Hill and Alloy | March 01, 2023

On February 28, 2023, Baker Hill, one of the leading financial technology providers of loan origination, risk management, and analytics solutions, announced that it has partnered with Alloy, an identity decisioning platform, to assist financial institutions in digitally verifying more prospective borrowers and ensuring compliance throughout the loan origination process. As a result of the collaboration, financial institutions utilizing Baker Hill NextGen® can take advantage of Alloy Onboarding's single-API identity decisioning platform, which integrates various data sources into individualized workflows throughout the account opening process. Hence, financial institutions can meet KYC as well as AML standards and verify borrowers rapidly and correctly with fewer manual reviews and less fraud. Baker Hill's banking clients have more options for fraud protection and identification solutions because of Alloy's integrations with more than 170 data sources used in the loan origination process. In addition, community banks no longer have to rely on code or expensive programming to make changes since Alloy makes adding new data sources or tweaking operations simple. Mike Horrocks, Vice President of Product Management at Baker Hill, stated, "There's been nearly a 7 percent increase in lending fraud among small and midsize businesses since 2020 and according to a 2021 report by Aite-Novarica Group, only 31 percent of lending institutions had negligible rates of fraud incidence." He continued, "At the same time, many community banks and credit unions are focused on lending outside of their traditional markets to expand their reach, which can expose these institutions to added risk. By partnering with Alloy, Baker Hill helps minimize risk and time spent on manual reviews so financial institutions can generate loan growth with confidence, even in new markets." (Source – Cision PR Newswire) About Baker Hill Baker Hill's business is to develop loan origination by combining technology and financial skills. NextGen® is a flexible, single-platform SaaS solution for commercial, small business, and consumer loan origination that controls risk from request to renewal. The organization was founded on decades of partnering with banks and credit unions to deliver critical resources to local communities. About Alloy Over 300 different businesses use Alloy's API-based platform because it allows them to connect to more than 160 different data sources, automate identity choices during account origination, and monitor these processes continuously. The company has enabled some of the most cutting-edge banks and fastest-growing fintech startups to expand and scale without increasing their exposure to fraud by connecting them with more qualified clients.

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