Fintech

How are incumbents adapting their offerings to make them more accessible?

Published

7 months ago

22 July, 2024

Now, with a focus on social and environmental impact, the term “fintech for good” has evolved from its initial meaning of charity. But it doesn’t stop there. This July, we’re on the hunt to discover how the fintech sector is doing “good” for local communities and the world, revealing current and future plans to make changes.

When you think of a financial service that does “good,” one of the first things that comes to mind is accessibility. Historically, certain groups have found it difficult to access financial services because of a series of checkboxes that needed to be filled out. However, the emergence of financial technology has allowed many of these groups to find the support they need financially through new and unique offerings. It has also acted as a wake-up call to many incumbents who have noticed they are losing customers to newcomers.

So what are incumbents doing to become more accessible? We set out to find out…

Collaborating with fintechs

Flyfish, Michael Zetser, CEO Michael Zetser, CEO of Flyfish

For Michael SignCEO, of Flying fishthe global digital banking market, the answer many incumbents are looking for lies in their perceived threats: fintechs. By partnering with fintechs, incumbents can accelerate their digital journeys and accelerate their ability to be more accessible to a broader group.

“Historical financial operators are increasingly collaborate with fintech startups to enhance their service offerings through external platforms. These partnerships allow incumbents to host their diverse financial services on a centralized platform, greatly simplifying user interactions and expanding their reach. This consolidation promotes inclusivity, making financial services accessible to a broader audience of diverse economic backgrounds.

“Integrating advanced features like personalized financial dashboards into these platforms simplifies financial management, making it more intuitive and user-friendly. Additionally, fintech leaders are driving the integration of financial education into these platforms.

“This addition helps demystify financial concepts, thereby creating awareness and increasing trust among users. For small businesses, these platforms face significant challenges such as high costs and complex access to traditional financial systems. By offering clearer, more accessible financial guidance and reducing barriers to entry, these platforms enable small businesses to secure the finances they need to expand.

“By leveraging these unified systems, incumbents are effectively dismantling traditional barriers to financial access and revolutionizing the way they serve a diverse, digitally savvy customer base. This shift demonstrates a commitment to creating more inclusive financial ecosystems.”

Personalization of services through AI and ML

Mila Khrapchenko, co-founder and co-CEO of Ameetee

Echoing Zetser’s sentiment on partnering with fintechs, Mila Khrapchenkoco-founder and co-CEO of Ameteea B2B fintech platform, also highlighted the importance that technology can have in enabling businesses to be more accessible.

“Incumbents, or large established players with significant market share and a stable position, are often perceived as rather slow-moving giants. However, digital transformation has affected everyone, including these large players.

“They are adopting user-friendly web and mobile applications, significantly reducing the cost of providing the service. Many operations can now be automated, such as opening accounts remotely, requesting credit limits, deposits and brokerage accounts.

“Furthermore, while the process may be slower for these large entities, they are also moving towards various partnerships with fintech companies or jointly supporting some initiatives. This trend helps them serve their customers more efficiently and effectively by meeting their needs more quickly. Examples include rapid onboarding processes and digital payment networks such as US Zella which was initiated and supported by major US banks.

“In addition, these companies are likely to be leveraging artificial intelligence and machine learning to process data and personalize services. In some markets, there are initiatives related to open banking, which makes services more accessible, reduces fees and lowers average costs for different services. This comprehensive approach is what we call financial inclusion.”

Data is the key

Christina Widhalm, CEO, Bloom Credit Christian Widhalm, CEO, Bloom Credit

Data has emerged as one of the most important assets an organization can have. After all, as the saying goes: knowledge is power. And in this day and age, data is knowledge.

Christian WidhalmCEO, Bloom CreditCredit data solutions provider explains how incumbents can offer more comprehensive and complete services using data.

“Incumbents are looking for solutions that can enrich their ability to understand their customers. Whether their customers are banked by the institution or by others, to learn things that they can’t find in a consumer credit relationship.

“Opportunities with things like consumer permissioned data, especially on consumer banking transactions, can help financial institutions learn more about their customers and provide them with better products, make smarter decisions about credit risks, and directly help their customers enrich their credit history. It’s a win-win situation.”

Targeting unbanked communities

Tachat Igityan, CFO and founder of destream

To sniff IgitianCFO and founder of outflowa financial platform for content creators, points out that some offers can be a godsend for unbanked consumers.

“To be more accessible, incumbents are changing their approaches by embracing digital transformation, and this is mainly happening by introducing mobile banking apps and online services to make it easier for customers to contact them.

“For example, they are personalizing these offerings through data analytics. To promote financial inclusion, fintechs have also developed fee-free accounts and micro-lending that target unbanked communities. All of these strategies together increase accessibility while embracing the evolving demands of customers in contemporary banking systems.”

Adapting products to each customer’s problems

Jeff Wissel, Accessibility Manager at Disability:IN

Jeff Wiseaccessibility manager at Disability:INthe company that promotes the inclusion of people with disabilities, explains how the products are adapted to different preferences and technical requirements.

“Financial technology incumbents are increasingly recognizing the importance of accessibility in their offerings.

“They are considering a wider range of disabilities when creating customer profiles, ensuring their products and services meet different preferences and technical requirements.

“This inclusive approach helps design more user-friendly solutions for individuals with unique needs. Additionally, companies are exploring ways to make financial education more accessible. This includes adapting educational content to make it more relevant and understandable for customers and prospects with disabilities, thereby fostering a more inclusive financial community.

“In addition, incumbents are offering modified debit and credit cards in large print and Braille formats, making them accessible to blind and partially sighted people. They are also introducing digital cards designed to be accessible, ensuring that all customers can manage their finances with ease and independence.”

Source

Fintech

US Agencies Request Information on Bank-Fintech Dealings

Published

6 months ago

30 July, 2024

FinCrypt Staff

Federal banking regulators have issued a statement reminding banks of the potential risks associated with third-party arrangements to provide bank deposit products and services.

The agencies support responsible innovation and banks that engage in these arrangements in a safe and fair manner and in compliance with applicable law. While these arrangements may offer benefits, supervisory experience has identified a number of safety and soundness, compliance, and consumer concerns with the management of these arrangements. The statement details potential risks and provides examples of effective risk management practices for these arrangements. Additionally, the statement reminds banks of existing legal requirements, guidance, and related resources and provides insights that the agencies have gained through their oversight. The statement does not establish new supervisory expectations.

Separately, the agencies requested additional information on a broad range of arrangements between banks and fintechs, including for deposit, payment, and lending products and services. The agencies are seeking input on the nature and implications of arrangements between banks and fintechs and effective risk management practices.

The agencies are considering whether to take additional steps to ensure that banks effectively manage the risks associated with these different types of arrangements.

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Fintech

What changes in financial regulation have impacted the development of financial technology?

Published

6 months ago

30 July, 2024

FinCrypt Staff

Exploring the complex landscape of global financial regulation, we gather insights from leading fintech leaders, including CEOs and finance experts. From the game-changing impact of PSD2 to the significant role of GDPR in data security, explore the four key regulatory changes that have reshaped fintech development, answering the question: “What changes in financial regulation have impacted fintech development?”

PSD2 revolutionizes access to financial technology
GDPR Improves Fintech Data Privacy
Regulatory Sandboxes Drive Fintech Innovation
GDPR Impacts Fintech Data Security

PSD2 revolutionizes access to financial technology

When it comes to regulatory impact on fintech development, nothing comes close to PSD2. This EU regulation has created a new level playing field for market players of all sizes, from fintech startups to established banks. It has had a ripple effect on other markets around the world, inspiring similar regulatory frameworks and driving global innovation in fintech.

The Payment Services Directive (PSD2), the EU law in force since 2018, has revolutionized the fintech industry by requiring banks to provide third-party payment providers (TPPs) with access to payment services and customer account information via open APIs. This has democratized access to financial data, fostering the development of personalized financial instruments and seamless payment solutions. Advanced security measures such as Strong Customer Authentication (SCA) have increased consumer trust, pushing both fintech companies and traditional banks to innovate and collaborate more effectively, resulting in a dynamic and consumer-friendly financial ecosystem.

The impact of PSD2 has extended beyond the EU, inspiring similar regulations around the world. Countries such as the UK, Australia and Canada have launched their own open banking initiatives, spurred by the benefits seen in the EU. PSD2 has highlighted the benefits of open banking, also prompting US financial institutions and fintech companies to explore similar initiatives voluntarily.

This has led to a global wave of fintech innovation, with financial institutions and fintech companies offering more integrated, personalized and secure services. The EU’s leadership in open banking through PSD2 has set a global standard, promoting regulatory harmonization and fostering an interconnected and innovative global financial ecosystem.

Looking ahead, the EU’s PSD3 proposals and Financial Data Access (FIDA) regulations promise to further advance open banking. PSD3 aims to refine and build on PSD2, with a focus on improving transaction security, fraud prevention, and integration between banks and TPPs. FIDA will expand data sharing beyond payment accounts to include areas such as insurance and investments, paving the way for more comprehensive financial products and services.

These developments are set to further enhance connectivity, efficiency and innovation in financial services, cementing open banking as a key component of the global financial infrastructure.

Sebastian Malczyk

General Manager, Technology and Product Consultant Fintech, Insurtech, Miquido

GDPR Improves Fintech Data Privacy

Privacy and data protection have been taken to another level by the General Data Protection Regulation (GDPR), forcing fintech companies to tighten their data management. In compliance with the GDPR, organizations must ensure that personal data is processed fairly, transparently, and securely.

This has led to increased innovation in fintech towards technologies such as encryption and anonymization for data protection. GDPR was described as a top priority in the data protection strategies of 92% of US-based companies surveyed by PwC.

Arid Islam

Financial Expert, Sterlinx Global

Regulatory Sandboxes Drive Fintech Innovation

Since the UK’s Financial Conduct Authority (FCA) pioneered sandbox regulatory frameworks in 2016 to enable fintech startups to explore new products and services, similar frameworks have been introduced in other countries.

This has reduced the “crippling effect on innovation” caused by a “one size fits all” regulatory approach, which would also require machines to be built to complete regulatory compliance before any testing. Successful applications within sandboxes give regulators the confidence to move forward and address gaps in laws, regulations, or supervisory approaches. This has led to widespread adoption of new technologies and business models and helped channel private sector dynamism, while keeping consumers protected and imposing appropriate regulatory requirements.

George Blandford

Co-founder, UK Linkology

GDPR Impacts Fintech Data Security

A big change in financial regulations that has had a real impact on fintech is the 2018 EU General Data Protection Regulation (GDPR). I have seen how GDPR has pushed us to focus more on user privacy and data security.

GDPR means we have to handle personal data much more carefully. At Leverage, we have had to step up our game to meet these new rules. We have improved our data encryption and started doing regular security audits. It was a little tricky at first, but it has made our systems much more secure.

For example, we’ve added features that give users more control over their data, like simple consent tools and clear privacy notices. These changes have helped us comply with GDPR and made our customers feel more confident in how we handle their information.

I believe that GDPR has made fintech companies, including us at Leverage, more transparent and secure. It has helped build trust with our users, showing them that we take data protection seriously.

Dr. Rhett Stubbendeck

CEO & Co-Founder, Leverage Planning

Source

Fintech

M2P Fintech About to Raise $80M

Published

6 months ago

30 July, 2024

FinCrypt Staff

Application Programming Interface (API) Infrastructure Platform M2P Financial Technology has reached the final round to raise $80 million, at a valuation of $900 million.

Specifically, M2P Fintech, formerly known as Yap, is closing a new funding round involving new and existing investors, according to entrackr.com. The India-based company, which last raised funding two and a half years ago, previously secured $56 million in a round led by Insight Partners, earning a post-money valuation of $650 million.

A source indicated that M2P Fintech is ready to raise $80 million in this new funding round, led by a new investor. Existing backers, including Insight Partners, are also expected to participate. The new funding is expected to go toward enhancing the company’s technology infrastructure and driving growth in domestic and international markets.

What does M2P Fintech do?

M2P Fintech’s API platform enables businesses to provide branded financial services through partnerships with fintech companies while maintaining regulatory compliance. In addition to its operations in India, the company is active in Nepal, UAE, Australia, New Zealand, Philippines, Bahrain, Egypt, and many other countries.

Another source revealed that M2P Fintech’s valuation in this funding round is expected to be between USD 880 million and USD 900 million (post-money). The company has reportedly received a term sheet and the deal is expected to be publicly announced soon. The Tiger Global-backed company has acquired six companies to date, including Goals101, Syntizen, and BSG ITSOFT, to enhance its service offerings.

According to TheKredible, Beenext is the company’s largest shareholder with over 13% ownership, while the co-founders collectively own 34% of the company. Although M2P Fintech has yet to release its FY24 financials, it has reported a significant increase in operating revenue. However, this growth has also been accompanied by a substantial increase in losses.

Source

Fintech

Scottish financial technology firm Aveni secures £11m to expand AI offering

Published

6 months ago

30 July, 2024

FinCrypt Staff

Aveni, Investment Management, AI, NLP, UK

By Gloria Methri

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Artificial intelligence Financial Technology Aveni has announced one of the largest Series A investments in a Scottish company this year, amounting to £11 million. The investment is led by Puma Private Equity with participation from Par Equity, Lloyds Banking Group and Nationwide.

Aveni combines AI expertise with extensive financial services experience to create large language models (LLMs) and AI products designed specifically for the financial services industry. It is trusted by some of the UK’s leading financial services firms. It has seen significant business growth over the past two years through its conformity and productivity solutions, Aveni Detect and Aveni Assist.

This investment will enable Aveni to build on the success of its existing products, further consolidate its presence in the sector and introduce advanced technologies through FinLLM, a large-scale language model specifically for financial services.

FinLLM is being developed in partnership with new investors Lloyds Banking Group and Nationwide. It is a large, industry-aligned language model that aims to set the standard for transparent, responsible and ethical adoption of generative AI in UK financial services.

Following the investment, the team developing the FinLLM will be based at the Edinburgh Futures Institute, in a state-of-the-art facility.

Joseph Twigg, CEO of Aveniexplained, “The financial services industry doesn’t need AI models that can quote Shakespeare; it needs AI models that deliver transparency, trust, and most importantly, fairness. The way to achieve this is to develop small, highly tuned language models, trained on financial services data, and reviewed by financial services experts for specific financial services use cases. Generative AI is the most significant technological evolution of our generation, and we are in the early stages of adoption. This represents a significant opportunity for Aveni and our partners. The goal with FinLLM is to set a new standard for the controlled, responsible, and ethical adoption of generative AI, outperforming all other generic models in our select financial services use cases.”