UK Organisations Lead in Adopting Business Automation

UiPath, the Robotic Process Automation (RPA) software company, has released a new study that reveals the current and future progress of automation in organisations across the world.

The survey, entitled The Advance of Automation: business hopes, fears and realities, was developed in collaboration with The Economist Intelligence Unit (The EIU). It questioned senior executives of mid- and large-sized enterprises in the UK, Canada, France, Germany, India, Japan, Singapore and the United States.

Results from the survey revealed that the future is bright for the automation of business processes in the UK. The survey was broken down into ‘leaders’ – those making extensive use of automation technologies – and ‘laggards’ – those making moderate or limited use of automation. UK respondents were one of the four countries populating the leader pack (11%). The other leaders are Germany, France and the US.

67% of UK business executives report being satisfied with the results of their automation initiatives so far – and are experiencing business benefits as a result. 73% of UK firms expect their companies operating costs to improve as a result of automating business processes – whilst 65% predict revenue growth and 62% forecast increased profitability. As a nation, the UK is ahead of the curve when it comes to business automation. Nearly half (48%) of UK businesses describe their use of automation as ‘extensive’, whilst 48% describe their organisation’s progress with automation as advanced. 15% consider their progress to be very advanced.

73% of UK firms expect their companies operating costs to improve as a result of automating business processes

Globally, over 90 percent of businesses already use technology to automate business processes, and companies in every industry surveyed – including manufacturing, healthcare and financial services – find value in it. Furthermore, nearly one-in-ten businesses (88 percent) worldwide believe that automation will accelerate human achievement.

There are few fields of organisational activity that are untouched by automation. That’s because it’s enabling businesses in every industry around the world to drive efficiencies by replacing manual tasks with automated ones. In the UK, the share of business processes currently being automated is being dominated by IT operations (67%), followed by administrative work and office management (60%) and customer service (58%).

Key benefits observed from business process automation globally include:

  • Focused employee attention on less repetitive, mundane tasks (91 percent)
  • Increased capacity to handle volume (91 percent)
  • New revenue sourcing (85 percent)

In the UK, the share of business processes currently being automated is being dominated by IT operations (67%)

84 percent of respondents globally report that the c-suite is the driving force behind automation initiatives for their business, with the responsibility rolling up to the CEO (22 percent), CTO (29 percent) and CIO (17 percent). Over 70 percent of c-suite respondents also report that RPA and AI are a high or essential priority to meet their strategic objectives, predicting that it will make them more competitive as a business. Specifically, RPA is an extremely high priority to meet strategic objectives for 70% of UK businesses.

“Business usage of automation is accelerating and widening to create opportunities for growth, and is encouraging greater creativity and innovation from employees as a result. We are pleased to see that business process automation has made considerable headway – but there is clearly room for organisations to improve their use of automation. We look forward to helping businesses drive their automation further, given the massive benefits they could experience as a result,” Bruno Ferreira, Area Vice President, UK & Ireland.

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Insurtech Startup Cuvva Smashes One Million Policies Sold Barrier

UK-based short-term insurance startup Cuvva has sold over one million policies via its mobile app, and has experienced roughly 750 per cent growth in policy sales in the last two years.

Since selling its first policy in 2016, the startup has sold over 32 million hours of motor insurance alone, providing a solution for the UK’s sharing economy. Challenging the insurance sector, Cuvva was the first to provide both hourly motor insurance and insurance via an app in the UK. 

Investment interest in insurtech is accelerating as new players exploit gaps that incumbent insurers are unable or unwilling to address. According to Willis Towers Watson, global investment in insurtech hit $1.42 billion in the first quarter of 2019. Additionally, the firm reported that deal count in the UK increased by 50%, during the same period. 

global investment in insurtech hit $1.42 billion in the first quarter of 2019.

New platforms are transforming the customer interaction model, differentiated product offerings are 10x’ing overall customer experience. Further activity will be seen in the sector as insurtechs develop customer-focused offerings, opposed to insurer led product-focused offerings, as seen in the past. 

Commenting on Cuvva’s recent growth, founder, Freddy Macnamara said:

“Cuvva is building a full-service insurance marketplace for the 21st century. Historically, lengthy, repeated sign up processes and complicated jargon-filled insurance policy documents don’t support customer needs. We are on a mission to change this by building insurance the way it should be – flexible, simple and jargon-free.” 

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Brexit and the Financial Services Sector: Time to Transform Customer Service with Voice Technology

By Gary Williams, Director of Sales and Consultancy, Spitch

October 31 marks the latest deadline in the seemingly endless Brexit debacle. Many companies and industries are still scrambling around trying to prepare for an uncertain future- the financial services industry is no exception.  

In the financial services sector, an industry largely regulated by EU rules, Brexit would also mean potential changes to regulations and the implementation of new compliance processes. Much like for other organisations, Brexit preparations for financial services companies will also require carefully managing relationships with partners and international money – but it is crucial that they also think about their customers.

The lack of clarity over what Brexit will actually entail means that ordinary consumers are in the dark over the likely effect on, say, their savings or pensions. Naturally, they will call their bank or investment company to try to get answers and reassurance – and this is where the industry faces both challenges and opportunities.

If companies cannot provide a great call experience – with short waiting times and informed contact centre staff – then they’ll face the ire of their customers and risk losing them. 

The corollary, of course, is that businesses can strengthen their relationship with customers and win over others by improving their call centre operations, reducing queues and making sure that advisers can answer the most complex questions accurately and without delay. 

If companies cannot provide a great call experience – with short waiting times and informed contact centre staff – then they’ll face the ire of their customers and risk losing them

Forget Brexit – this should be the ambition of any customer-focused industry, whether it’s financial services, retail, travel, or any other. We all know what irritates and infuriates customers when they call to complain or seek information: long waits, complicated voice menus, ill-informed advisers. Identifying the problem has always been much harder than fixing it but, thanks to technology, the financial services industry is now in a position to do so. 

New developments in Artificial Intelligence (AI) and natural language Machine Learning (ML) can bring significant benefits by improving voice-driven customer experience through pioneering speech recognition technology.

AI and natural language processing (NLP) are now delivering real value to organisations. Industry analysts Gartner predicts that by next year half of analytic queries will be generated using searches based on natural-language processing. Meanwhile between 20-25% of searches made with the Google Android App in the US are already voice searches, according to Google.

New developments in Artificial Intelligence (AI) and natural language Machine Learning (ML) can bring significant benefits by improving voice-driven customer experience

One key development is in voice-driven customer service, a perennial bugbear of callers. Today, AI is far more capable of understanding voice commands; what’s more, it can now also identify callers’ intent and sentiment, perform voice biometrics non-intrusively, transcribe calls and flag issues in real time. AI can also ensure that the caller doesn’t lose focus and that they remain interested in what is being communicated to them via a speech-enabled Interactive Voice Response system. 

Voice-driven technology can also provide rich data and insight which will empower them to improve their operations and deliver better, more personalised services.

For example, one international insurance company sought to improve customer service by requiring its employees to listen to archival contact centre conversations. The company deployed an AI-powered omni-channel communication platform that helped to identify which calls were going wrong and where, and suggested changes to business workflows. The technology also helped the team to compare the efficiency of different marketing campaigns and to assess agents’ performance against several key criteria.

Incredible as it may seem, AI can even understand customers better than human agents

In Switzerland, meanwhile, a car insurer is improving the customer experience by shortening call queues with an AI-powered self-service system. The system extracts the required details before giving customers the option to have their vehicle fixed by their local garage, a partner garage or a drive-in; in the case of the first two options, the system will automatically issue a ticket to get the work done. A crucial part of the system is that a caller can get through to a human at any stage by saying “agent”, ensuring the smoothest customer experience possible.

Incredible as it may seem, AI can even understand customers better than human agents. It’s now capable of understanding callers’ sentiment and intent, their speaking habits, conversational linguistics, dialects, idiosyncrasies, slang, foreign accents, intonation, emphasis, intention and enunciation.

That’s not to say that humans will no longer have a role in the contact centre. Many people prefer speaking to a real person, especially when dealing with complex queries. Rather, we should see AI as an augmentation of people’s skills and experience.

It’s impossible to predict what the future holds, but one thing is for certain – customers are continuing to demand exceptional customer service.  Whatever the outcome on 31st October, financial services companies need to unlock the power of AI- and NLP-based technologies to provide the highest levels of customer service. Financial service companies and banks needn’t fear Brexit – as long as they use it as an opportunity to ensure they are equipped with the tools to deliver the outstanding customer service their customers expect and deserve.

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PayPal Launches Xoom, the International Money Transfer Service in the UK

PayPal has launched Xoom, its international money transfer service, in the UK and 31 other European markets. People in the UK can now use Xoom to quickly send money, pay bills or top up phones to more than 130 markets internationally. 

The global remittance market is an estimated $689 billion industry with Britons remitting over $26 billion annually. The United Kingdom is home to over 9.3 million people who were born outside of the UK – many of whom support family members overseas for things like medical bills, education, utility bills, and other financial needs.

Historically, the speed of securely and efficiently moving money across borders has been slow, but advances in digital technology—in particular mobile—are enabling a significant reduction in transfer time. According to the latest figures from the World Bank, almost half (45%) of all money transfers from the UK are sent to Nigeria, India, Pakistan, China, Kenya and the Philippines, the six largest non-European receivers of remittances from the United Kingdom.

The introduction of Xoom usually allows loved ones in these countries to receive money sent to a bank account or for cash pick up in approximately five minutes or less.

almost half (45%) of all money transfers from the UK are sent to Nigeria, India, Pakistan, China, Kenya and the Philippines

Dan Schulman, PayPal’s CEO and President, said:

“The way we move and manage our money has changed dramatically in the last few years. We have moved beyond the days when the only option for sending money abroad was to queue at a counter for hours. But even in 2019, it still takes too long to get money from the United Kingdom to a loved one in another country.

We know how important these money transfers are in the lives of millions of people, and how crucial it is that money arrives swiftly and more securely so it can be used for things that matter. With Xoom, someone with a smartphone on a bus in London can send money that can be accessed within minutes in Mumbai to pay for a family member’s medical emergency or to keep the lights on for their family back home.”

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Insurers to Spend $634m on Robotic Process Automation by 2024, as Efficiency Gains are Sought

A new study from Juniper Research found that insurers will spend $634 million on RPA solutions by 2024, rising from $184 million in 2019; a 245% increase over the next 5 years. RPA (Robotic Process Automation) is software designed to reduce operational costs by automating basic repetitive tasks.

The new research, Robotic Process Automation in Telecoms & Insurance: Vendor Positioning, Strategies & Forecasts 2019-2024, found that previous growth strategies using M&A (Mergers & Acquisitions) in the highly-saturated insurance market have resulted in disparate policies, practices and software. Adopting RPA solutions will appeal to insurers by enabling substantial cost and time savings, created by mitigating these disparities.

 North American & European Insurers to Lead Investment

Juniper Research forecasts that North America and Europe will lead RPA adoption over the next 5 years, with more than 65% of insurance providers adopting the technology by 2024. As the insurance market is largely saturated in these areas with flat premium growth, insurers must cut their operational costs quickly to remain competitive. The research found that RPA will become a crucial enabler in this search for efficiency gains. The research urged vendors to ensure effective AI integration so that RPA can handle valuable tasks in a highly reliable way.

“RPA is an investment which is usually 20-30% the cost of an employee. It’s low-risk, high return and quick to implement.”

Average RPA Spend Per Insurance Company to Grow at 30% Over Next 5 Years

The research anticipated that advances in RPA solutions will drive growth of the average spend on RPA per insurer. It forecast that the technology would leverage advances in AI to offer increasingly sophisticated services in fields including underwriting, claims management and data handling; driving average spend per company to 30% over the next 5 years.

Marie Myers, CFO of UiPath, commented to TFT:

“If you’re out there today and you have to make really large investments, RPA is an investment which is usually 20-30% the cost of an employee. It’s low-risk, high return and quick to implement. It’s very cost-effective and delivers incredible results.”

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Rosecut Launches Offering to Manage Wealth of Under-Serviced £3.2 Trillion ‘Middle Market’

Rosecut, the wealth management platform powered by artificial intelligence, has launched to meet the needs of affluent ‘middle-market’ investors abandoned by traditional wealth managers and private banks.

Combining learning algorithms and human insight, Rosecut provides fast, informed and bespoke investment focused financial advice, whilst keeping fees lower for the investor.

The affluent ‘middle market’ consists of individuals who have holdings of £100,000-£2m in investable assets. These individuals have become invisible to traditional wealth managers in recent years due to compliance cost inflation. While five years ago, the account minimum would be c.£1m, today it is more like £2-5m, leaving investors at sub-£2m with very little support.

Rosecut’s mission is to serve these individuals with guidance on how to protect and grow their wealth so that they can plan for key life milestones and realise their aspirations through investment. It’s a market of approximately nine million under-serviced UK individuals, representing total investable assets of c.£3.2tn.

Most investors now demand the convenience of digital services, for easy access and real-time monitoring, and, while this is readily available to retail investors from the likes of Nutmeg and Wealthify, traditional wealth managers, serving high-net worth individuals, rarely provide it.

Rosecut’s digital solution offers client access and monitoring anytime, anywhere. Its proprietary AI replicates bespoke advisor sessions in private banks, based upon genuine private banking experience and knowledge, delivered through the platform in real time. It also offers a Rosecut Club service to allow members to connect and share experiences.

It is building a supervised learning algorithm based on the field experience of its financial advisory team, using reinforcement techniques that will allow the algorithm to provide a high-quality bespoke financial strategy for all users under the supervision of human advisors.

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Lloyds Banking Group Introduces New Credit Card Freeze Options

Lloyds Banking Group customers now have a greater range of options to control where and how they use their credit card

From today customers will be able to access ‘card freeze’ through their mobile app, allowing them to stop their credit card being used in a number of different ways.

Flexible and dynamic, Card Freeze lets customers choose which types of transactions are allowed from their mobile app. Customers who may have mislaid their card, at home or abroad, can simply “freeze card” transactions. Once they find it, they can just “unfreeze” with ease.

Customers can also exercise greater control over any additional cards, avoiding unexpected spending sprees and choosing which transactions can or can’t be made on all cards linked to their account, including online purchases.

These new options are in addition to the control services introduced for debit cards in August 2018, which allow debit card customers to freeze usage abroad, online and remote, and freeze at tills or terminals.

Customers will see information pop-up on how to make use of the new functionality when they log in to their mobile app. These features are easy to use, simply “switching” on or off the buttons in the card management area of their mobile app.

  • Freeze card: Stops all card based transactions
  • Freeze abroad: Stops all point of sale transactions and ATM withdrawals outside of the UK
  • Freeze online and remote: Stops all transactions where the card is not physically present
  • Freeze at tills and terminals: Stops transactions where the card is present
  • Freeze ATM withdrawals: Stops withdrawals at ATMs

 Stephen Noakes, Retail Transformation Director at Lloyds Banking Group, said:

“The latest features help customers make the most out of their mobile banking put more control at their fingertips when it comes to managing everyday finances. Behind the scenes in our technology labs, we are constantly testing new ideas with customers, so that they can help us from the beginning to design the look, feel and function of their mobile banking.”

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Finding a Recipe for Fintech Success

By Andrew Garvey, Chief Commercial Officer, Countingup 

London fintech week has once again drawn attention to what is a rapidly-changing financial services landscape across the capital and beyond. And much of the disruption is being driven by the ongoing rise of fintechs as a major force in the London and UK economies.  

A new report from recruitment consultancy, Robert Walters and market analysis company, Vacancy Soft, found that in 2018, job creation within the fintech space grew by 61% in London and 18% in the regions. 

In recent years, we have seen London become the fintech capital of the world. In line with this, the report also found out of the 29 fintech unicorns globally – companies with a valuation of more than $1bn (£765.5m) – nine are based in the Californian hub, while seven are housed in the UK.

Building the foundations 

The rationale for London’s success is clear as the city has access to capital and lots of talented people, a dynamic fast-growing financial services sector – and the government has its seat of power there too. Everything a budding fintech would need is close by in fact.  

in 2018, job creation within the fintech space grew by 61% in London and 18% in the regions.

So there is a positive environment in place for fintechs to thrive, but what qualities do they need to have in place to take advantage? The starting point for success has to be having a product or a solution that is doing something different and genuinely disrupting what is happening in the marketplace. At Countingup we’ve focused on delivering on these twin goals in developing what we believe to be the first banking app in the UK to offer a fully integrated bookkeeping solution. 

Having a great product will also help fintechs ensure they can recruit and retain the right people to drive success. You need to be attractive to potential hires and you need to have a good working culture. If you have a great product combined with a great team and a great culture, that strikes the right balance between the commercial and tech sides of the business, that should set you on the road to success. 

That balance is important. The product and technology developers need to have empathy with the challenges and drivers that impact the commercial teams and vice versa. Ultimately it comes down to what the customer wants. There is no point in developing any technology unless you are delivering a service to the customer.

Finding a differentiator 

If I was to highlight just one piece of advice I would give to anyone setting up a fintech business, though, it would be: don’t just focus on developing something that is nice to have, focus instead on developing a product that is essential and solves genuine pain points. ‘Be a pain killer, not a vitamin’, as the mantra has it.

As your business establishes itself and develops, you will want to find ways of attracting investment that drives further growth and enables them to stand out from the pack. To do this well, you need a clear value proposition and market strategy and people in place who have some experience in selling into your target market. That’s what venture capitalists will be looking for above all – so you need to get that right. 

There is no point in developing any technology unless you are delivering a service to the customer.

It is also important to have a positive attitude. We hear a lot about the fintech unicorns and their successes but that should not be daunting even for the smallest start-ups.  What’s great about the unicorns is that they shine a light on the sector and show how much ‘good stuff’ is happening. Every start up can aspire to become one. It’s not unrealistic. The size of the market we are trying to address is so large that once you make a breakthrough, you can scale rapidly in fintech. Every business and every individual needs financial products, after all.  

That’s partly why I see a bright future for fintechs over the coming years but there are many other factors at play driving fintech growth. Most people are becoming more comfortable using fintech and using mobile apps to ‘carry’ a range of different services but they also expect a far higher level of technology and service than they used to. People and business are also becoming more receptive to, and more accepting of, new ideas. 

As a result, we are not anywhere near ‘peak fintech’ yet. Dozens of new companies are likely to emerge. The size of the financial services market in the UK alone, that alone Europe in the world, means there are billions and billions of pounds worth of value tied up in traditional institutions. We are likely to see the transfer of that value to the burgeoning fintech sector, start to gather pace over the coming years.  

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New Partnership Provides Additional Funding Options for SMEs

Alternative SME credit specialist Caple and accountants Dains have announced a partnership to help Midlands-based SMEs access unsecured funding for growth.   

SMEs typically have difficulties raising money if they don’t have assets to put up as security to banks. That can mean they instead have to make personal guarantees or dilute their ownership by issuing equity.

Now, through this new partnership, Caple and Midlands-based Dains will help SMEs across the region access long-term unsecured debt finance of between £500,000 and £5 million. 

Caple is the first in the UK to provide access to unsecured lending based on the future cash flows of the SME. The business requires no collateral or personal guarantees as security. Loans originated through Caple also complement existing bank lending. 

Roy Farmer, Head of Corporate Finance and partner at Dains Accountants, said:

Roy Farmer

“Caple has delivered the most significant change in the UK SME funding market in the last 18 months. Caple’s offering is unique, and the unsecured loans it offers access to can make the difference between SMEs being able to access funds and implement their growth plans and not.” 

Caple originates loans through a partner network of accountancy and business advisory firms such as Dains.   

The way it works is that Dains assesses the eligibility of its clients for funding, supported by Caple’s proprietary technology platform. It then prepares the business plans and financial forecasts, within the platform, that make the case for funding.

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The Evolution of Cybersecurity Threats: Q&A with Pat Carroll

With over 25 years’ experience in Information Technology and Financial Markets, Pat Carroll, Executive Chairman and CEO of ValidSoft, has had the opportunity to build extensive knowledge in security, strong authentication and voice biometrics. TFT sat down with Pat to talk about the future of cybersecurity.

TFT: In your opinion, how much has the cybersecurity threat landscape shifted over the last 20 years?

Pat Carroll, Executive Chairman and CEO of ValidSoft

Pat: A change in the cybersecurity threat landscape can be traced back to the early 90s with the introduction of the publicly available World Wide Web. This led to the rise of electronic or Internet services, such as online and mobile banking. Also around this time, the first commercial email services, such as AOL and CompuServe appeared, followed soon after by the first web-based mail services such as Hotmail. The advent of such services and the growth of email spawned what we now know as Phishing, and a new paradigm in fraud emerged.

The introduction of digital channels, the use of telecommunications and the decentralisation of service fulfilment have all created new and further opportunities for cybercrime. In banking, for instance, the days of the armed robber are largely gone. The way to the cash is now through the web, an app or the call-centre. 

When people used to transact with an entity such as a bank they did so in person and their identity was themselves with physical forms of proof-of-identity. And the cash was physical. Today, we bank remotely, the cash moves electronically, and our identity is largely determined through a form of proxy such as a PIN or password. However, these proxies are weak and an easy target for cyber criminals and hackers.

The threat today, therefore, is the theft, loss or hijacking of these proxies as they are literally the keys to the bank or other electronic services. Before services became web and app-based, no one even had a password to steal, let alone twenty of them (or worse, a single password for accessing twenty services). They physically cannot be defended against all of the cyber fraud vectors and methods employed to obtain them and this is why we are starting to see the migration trend away from proxy forms of identity and instead towards physical identity in the form of technologies such as voice biometrics.

TFT: Do you believe these changes to the threat landscape have changed the strategic considerations of businesses operating in the finance space?

Pat: The rise of the digital age and the new forms of cyber threat were not understood initially and largely not considered at the Board level. This has changed over time and the topic is now a regular standing agenda item for many/most Boards, especially in larger organisations, particularly financial institutions.

The threat today, therefore, is the theft, loss or hijacking of these proxies as they are literally the keys to the bank or other electronic services.

A serious concern to many is the loss of data and the associated reputational cost, as well as monetary costs in many cases. The introduction of legislation such as the GDPR in Europe has no doubt been another important agenda item in Board rooms around the world.

However, cybercrime is more than the theft of databases. It is also transactional, and this is where there is a potential discrepancy in considerations and budgets. Many financial services institutions, use security systems that are weak or were designed to be robust but have since been shown to be vulnerable to widely published cyber-attacks. A good example of this is SMS-based security systems, and the SS7 transport layer in mobile communications infrastructure, that are very vulnerable to cyber-attacks, including SIM Swap  fraud (fraudulent number porting). Provided the losses through cyber fraud are “within budget”, many organisations take no action to rectify the weaknesses. This mentality needs to change – there should be zero tolerance for fraud, and certainly no financial institution should ever have a budget for fraud.

The problem that will face Boards going forward, is when a cyber threat that is known, but not considered a major threat, becomes one. Trying to play catch-up at that point can be too late, and the consequences severe.

TFT: How are the demands and expertise of cybersecurity in the finance industry driven by technological advancement?

Pat: Whilst the fight against cyber fraud in particular is still an arms race, the defensive strategies deployed by businesses in the finance industry are still largely reactive. The cyber threat is not (only) from teenage hackers but from well-funded, well organised and incentivised organisations (or nation states), employing skilful people with wide ranging technical skill sets.

cybercrime is more than the theft of databases. It is also transactional, and this is where there is a potential discrepancy in considerations and budgets.

The nefarious side of this arms race tends to be more agile and are more adept at finding the weaknesses in both the digital workflows of today’s business models, as well as defences put in place to protect them.

We see this especially in the reliance organisations place on established, trusted networks such as telephony and SMS, which have been cunningly exploited by cyber criminals in ways never envisioned by the organisations utilising them or indeed the networks themselves.

We are now on the cusp of the Artificial Intelligence (AI) era, which is now the buzzword being heard more and more. As organisations in the finance industry look to adopt AI, we would suspect that cyber criminals are looking more closely at how to exploit its deployment than organisations are looking at how it might be exploited. Technology solution rollouts often occur ahead of all security due diligence.

TFT: What role will cybersecurity companies play in guiding financial organisations through this evolving threat-scape?

Pat: The answer to this lies largely within the culture of a particular organisation. As previously stated, defensive strategies are largely reactive, and in many cases so is the deployment of cybersecurity solutions. In a similar way to how some people view insurance, i.e. why pay for something that hasn’t even happened and probably won’t, some organisations may not budget for expert advice and pre-emptive security strategies. However, this is a false economy, as the cost of then being a victim to a cyber-attack and having to play catch-up, becomes exponential.

defensive strategies are largely reactive, and in many cases so is the deployment of cybersecurity solutions.

Threats and weaknesses can be understood, the appropriate solutions chosen and implemented in a structured and planned fashion, rather than in fire-fighting fashion in a reactive model where the reputational and financial damage is already done.

Cybersecurity companies, similar to cybercriminals, spend considerable time analysing channels and solutions for weaknesses and devising methods of attack. By understanding the weakness, comes the understanding of how to defend them and it is this information that is critical for financial organisations to understand.

For those organisations in the finance space that do involve experts in both reviewing their existing defences against the current cyber landscape, as well as the technologies and associated threats on the horizon, their expense should be viewed as an investment in their ongoing operational wellbeing. Some solutions, and I am of course a huge proponent of voice biometrics, also provide a compelling return on investment and business case, over and above the pure security benefits, by for example reducing the time and costs of engaging customer experience and making the customer experience more attractive.

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Juniper Forecasts Mobile Money Transfers to Exceed 200 Billion Transactions in 2024, as Domestic P2P Drives Growth

New data from Juniper Research has found that the volume of domestic money transfers via mobiles will exceed 203 billion in 2024, up from 130 billion in 2019. Domestic P2P payments will drive this growth; accounting for 80% of all domestic transfers in 2024.

According to the new research, Digital Money Transfer & Remittances: Domestic & International Markets 2019-2024, domestic transfers are being driven by increasingly easy mobile payment systems. In developed markets, digital wallets have made P2P payments far simpler, with services including PayPal, Venmo and Cash App enabling low cost, fast and secure payments for a rapidly growing number of users. In developing markets, mobile money provided by network operators is a key enabler of financial inclusion; enabling the unbanked to enter into the wider digital economy.

Social Payments Driving P2P Success

The research found that the rise in social payments is driving growth in the mobile P2P channel. Payments via Venmo have a strong social element, which has boosted its popularity with millennials. The introduction of Libra by Facebook will further leverage social features; boosting the potential of social payments in a vast addressable market.

Research author Nick Maynard explained: “Social payments are highly appealing to younger users, as they enable simple and effective digital payments to displace cash. However, data security concerns about mixing payments and social networks will impact consumer attitudes among older users”.

Chinese Market Leading for Now

Largely due to the ‘red envelope’ phenomenon in China during the Chinese New Year, Chinese transactions will account for 68% of the total volume of domestic mobile transfers in 2019. Alipay and WeChat Pay have become a crucial part of the process and will drive future growth in this market. 

However, China’s share of the overall transaction volume will gradually fall; accounting for a reduced 57% by 2024. Growth is fastest in Africa, while operator-driven mobile money solutions are boosting financial inclusion at a rapid rate.

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Could Countries Use Blockchain as a Tool Against Inflation?

The blockchain has been advertised multiple times as an alternative currency to use in the global markets, but at this point, there are very few avenues where traders could use their digital assets to purchase goods online.

There have been rumours that Litecoin will soon partner up with Flexa, potentially opening up one of the largest e-commerce stores for crypto enthusiasts.

However, cryptos have much more potential than just providing the best shopping experience online. They have capabilities that could help an entire nation survive hyperinflation thanks to decentralised transactions and the digital economy.

There are multiple cases where people have either completely or partially moved to make crypto payments via mobile phones in order to somehow survive the onslaught that their national currencies have endured.

One of the best examples for this is Venezuela. Let’s take a look at how the local population handles its economic crisis.

Venezuela hyperinflation

Venezuela’s hyperinflation problem has been going on for years now, leading up to a point where people can not get their hands on goods for basic needs, or they simply cannot afford it due to how low the salaries are there.

“cryptos have much more potential than just providing the best shopping experience online.”

The only way most Venezuelan families have managed to survive such a recession was through payments from family members abroad. For example, there used to be millions of USD being funnelled into Venezuela from immigrants in the United States, but after political tensions flared up, it’s become much harder.

Therefore, the local population had to find an alternative method to somehow survive. That was around when Dash first entered the market. Having already developed their mobile transaction system, Venezuela was the ideal market they could have tapped into.

To this day, a large portion of Venezuelan consumers and even merchants use Dash as their daily currency.

In response to the blockchain pretty much hi-jacking their economy, the Venezuelan government introduced its own cryptocurrency called Petro.

However, the thing about cryptocurrencies is that they’re not as trustworthy or reliable if they’re in the hands of the government. Multiple companies like Dash have proven to be much more capable of sustaining their currency than the Venezuelan government, therefore the local population simply ignored Petro, as if it never existed.

But what exactly was the Venezuelan government aiming at when they introduced Petro? Why would it have been a benefit to the local economy?

How cryptos are much more manageable

There’s this useful feature that cryptocurrencies possess, which is “burning”. This means that when a company sees that their product is performing well enough but needs that extra push to truly kick it off or help it remain stable, they buy back large quantities of the cryptocurrency and then burn them.

Burning means that the coins are simply taken out of the equation. The supply decreases pretty much overnight, hitting the prices exponentially and supporting its exchange rate.

Although this resembles a frozen exchange rate system for a country, it needs to be mentioned that it’s much cheaper, simply due to the fact that the currency’s performance is not based on another country’s or currency’s state of affairs.

This was the problem for Thailand in the past when they had pegged their currency to USD and failed to keep up with it, ultimately reducing the country’s economy to an extremely low level.

With cryptocurrency, its price reacts to the local as well as global supply and demand, much like regular currencies. But the government or the company involved in emitting these currencies can take drastic measures when they’re needed to either buy back some cryptos from the community or burn some of their reserves.

This helps alleviate the extreme volatility of the blockchain in its infancy, while still maintaining a relatively hands-off monetary policy.

“blockchain can provide an alternative payment system for those willing to do international business when there is no such opportunity.”

Protection against sanctions

Another reason that countries like Venezuela are looking at mass integration of the blockchain is due to economic sanctions imposed by other countries. In this case, Venezuela is suffering from US sanctions, which is preventing the Bolivar from ever recovering, but considering the state it is in now, it’s highly unlikely that it ever will even if there were no sanctions.

If we want to look at a good example of sanctions affecting inflation, we need to look no further than the country of Georgia, which recently had a massive depreciation of its national currency due to potential sanctions from Russia.

The anticipation of the sanctions caused as much as a 10% decrease relative to the dollar, but has reverted. This was due to potential sanctions on transactions, and they’re usually the ones targeted when the political scene gets a little distorted.

Having a comprehensive blockchain platform on a national level removes the risks of being cut off from a major market, like most countries that can afford sanctions are usually important clients of the “victim”.

In Georgia’s case, Russia is one of the biggest markets for wine exports and tourists. Having it cut off, would damage the economy to unimaginable proportions, hence the depreciation.

Overall benefits against inflation

In the end, we boil down the benefits of the blockchain to a few key points for countries.

One is that they’re able to cut supply without having to tie their currency against a foreign one, which usually damages the economy much more than it helps it.

And the second one is that the blockchain can provide an alternative payment system for those willing to do international business when there is no such opportunity.

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SmartStream Publishes Paper Highlighting the Importance of Managing Intraday Liquidity to Generate Revenue

SmartStream Technologies, the financial Transaction Lifecycle Management (TLM®) solutions provider, has released a white paper to inform financial institutions of the regulatory pressures imposed on intraday liquidity requirements. This has now moved beyond reporting positions to actively managing and controlling intraday liquidity, all in an effort to reduce costs and increase profitability.

The white paper titled: ‘Intraday Liquidity Management: From a costs discussion to a revenue opportunity’ –  explores the benefits that can be realised by financial institutions when they transform intraday discussions from an operational burden into adding true business value. It also analyses how institutions can leverage next-generation technologies like Cloud, Artificial Intelligence and Machine Learning to achieve the goals of real-time, active management of global intraday liquidity.

Nadeem Shamim, Head of Cash and Liquidity Management, SmartStream, comments:

“While this may seem to be another exercise in regulatory compliance, active intraday management offers a competitive advantage in the changing regulatory landscape. It provides added benefits to both banks and their customers. In the past, intraday liquidity management was a nice to have, but this has moved to a ’must have’ and the trend is to optimise the management of intraday liquidity, from a cost perspective to a potential revenue generating exercise. This typifies the kind of discussions we are currently having with our customers on a daily basis”.

The paper reviews the regulators’ views and the monitoring tools available, including stress testing scenarios. Additionally, the value drivers suggest that whilst meeting regulatory obligations is undoubtedly front and centre for most financial institutions, the ability to manage liquidity intraday and to stress test liquidity demands are not simply a matter of regulatory interest. There are considerable business optimisation opportunities that can come from having a strengthened intraday liquidity framework. Finally, the paper discusses the current status of where banks are now with their monitoring of intraday liquidity.

Click here to download the white paper from the SmartStream website.

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Fintech Trends in Wealth Management

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Advancements in technology have truly changed the way that we live our lives. Before we still had to wait at least a month for letters to arrive; now, emails reach the recipient the moment the Send button is clicked. Before we had to visit supermarkets to buy groceries and other stuff that we need; now, all we have to do is click and swipe, and a package full of groceries can be sent right to our doorstep.

Technological changes are rampant in wealth management as well. There is a misconception that only younger rich people would want access to technologies that revolutionise wealth management. The truth of the matter is that even those who belong to the older cohort want to use advanced technologies when dealing with their wealth. 

In this article, we present three of the most promising fintech trends for 2019.

Hybrid of Automated and Human Financial Advising

Relying on algorithms, artificial intelligence (AI) units are able to make good investment choices. In fact, there are reports that the advice given by these “robo-advisors” yielded good two-year returns. 

While this looks and sounds good on record, the wealthy still have reservations when it comes to entrusting the future of their money solely to a pre-programmed software. As a response, wealth management firms adopted the hybrid approach: they now offer human financial advisors who have access to AI. The AI programme takes care of the complex calculations, making sure that the whole portfolio is within tolerable risk levels. The financial advisor covers the more delicate and personalised customer service. 

Doing it this way makes it possible for clients to take advantage of the complexities of AI and be comforted in the fact that a totally rational and feeling human is actually working for them.

Mobile Wealth Management

More and more business entities are going online today. The bookseller, electronic distributor, and even the caterer is now taking advantage of online platforms to widen their reach.

Similarly, fintech has also found a way for wealth management services to be made mobile. There are now programmes that make it possible for clients to contact their advisors through apps. This makes the job of the advisor more of an on-call type, and not everyone might like this setup. But failure to adapt puts them at risk of being viewed as backward-thinking, and therefore unreliable.

Open Banking

In 2018, a new fintech breakthrough was developed in silence. Dubbed open banking, this initiative is backed by the government and is particularly aimed at providing clients the ability to generate more useful insight just by looking at their financial data. An open banking system allows a client to collate his financial data in one place. Of course, the banks that provide the data must be given explicit permission to do so.

This technology is still being refined, and it is said that it will only reach its most effective and efficient if banks and fintech startups are able to collaborate more meaningfully. 

If you are a high net-worth individual, knowing the trends in fintech is going to be beneficial for you. By studying them closely, you’ll be better able to make the right investment decisions and give more precise directions to your financial advisors.

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The Rise of e-Commerce in Latin America

By Jack Ehlers, Director of Product, Payment Networks and Business Development at PPRO

Being home to richer nations such as Uruguay and Chile whose GDP per capita parallels those of mid-ranking EU countries, alongside poorer states such as Peru and Colombia which have a GDP per capita lower than the poorest EU member state, it is unsurprising that Latin America is universally known for being one of the most economically diverse areas in the world. 

Once again, Latin America’s economy is on the rise. 155.5 million people in the continent are expected to use online platforms to buy goods and services in 2019 – a staggering increase from 126.8 million in 2016. Despite Latin America’s e-commerce market remaining small, recent figures show that in comparison with Asia Pacific or North American, the region’s retail e-commerce sales are predicted to rise to $79.7 billion U.S, dollars in 2019 from just $49.8 billion U.S. dollars in 2016.

With a population of 386 million, there is an abundance of potential opportunities for e-commerce success in this region. However, the economic environment in Latin America also presents some challenges. But this is not a reason to shy away from it. After all, the value of online commerce is estimated to be worth $41.22 billion US dollars. What’s interesting however, is that the booming e-commerce growth in recent years took place against a backdrop of a struggling economy. While many wouldn’t expect a growth in e-commerce during economic unrest, this surge mostly came from the rise in internet and smartphone usage which provided access to goods from abroad that were previously out of reach. 

The e-commerce explosion

Latin America’s economy has traditionally been dominated by primary commodities. Low value raw materials and intermediate goods make up the overwhelming bulk of exports. Latin America’s abundance of, and thus reliance on, raw materials worked to its advantage in the early-to-mid 2000s. Between 2002 and 2007, Chinese consumption of commodities exported from South America increased, on average seven-fold.

155.5 million people in the continent are expected to use online platforms to buy goods and services in 2019 – a staggering increase from 126.8 million in 2016.

The growth in the commodities trade crowded out other economic activity. From the 1970s up until the late 1990s, South American economies diversified and become less reliant on a small number of exports. However, in the early 2000s, this process went into reverse. This not only left private prosperity highly dependent on a narrow range of economic activity, it did the same for state revenues. Before oil prices began to decline in 2014, for instance, 47% of Venezuela’s public revenue came from taxing the commodities trade, primarily oil.

By 2008, with the financial crisis already in full swing, commodity prices were falling. After this period, a normalisation of commodity pricing in the post global financial crisis period between 2010 and 2016 translated into significantly lower growth rates. But this all changed in 2016, helped by the explosion of e-commerce in the region. Now, Latin America looks to be on a recovery path and the region generates better results, with e-commerce at the forefront of this growth. 

Defeating logistical challenges

Latin America still has much to overcome, especially when it comes to payment processing. In Latin America, access to secure, credit card-based payment methods are limited. In fact, many people in the region do not use a formal banking system. Amongst the logistical nightmare of a cash-based society for ecommerce providers targeting the region, merchants have found ways to manage this reality. eShopWorld reported that 36% of online consumers prefer to utilise PayPal, and 35% use Cash on Delivery. 

Interestingly, in the region’s largest markets – Brazil and Mexico – consumers’ preferred payment method is via credit card. These two markets hold enormous potential for e-commerce in Latin America. There are currently 66.4 million e-commerce users in Brazil, with an additional 28.2 million expected to be shopping online by 2021. Four years from now, these 94.6 million e-commerce users are anticipated to spend an average of 307 USD online. By comparison, in Mexico, there are 59.4 million internet users, accounting for just under half of the population, leaving room for substantial growth. The number of Mexican internet users is equivalent to the entire population of the UK. 

in the region’s largest markets – Brazil and Mexico – consumers’ preferred payment method is via credit card

However, it isn’t all plain sailing even when targeting the most affluent populations in Latin America. Logistics, traffic and infrastructure are a major issue for the region and has a detrimental impact on sales, where logistics alone can amount to 15% of the cost of what’s sold. Many online retailers have put logistics on the back burner for years, focusing on the user experience through purchase, and as a result it can take weeks for a purchase to arrive at a customer’s door. In order to remain successful in the booming e-commerce era, investment in this area could result in more e-commerce sales in smaller regions. 

Changing attitudes

A return to growth, even if it’s still in its early stages, provides a better environment for retail than the economic stagnation and contraction of recent years within Latin America. The region’s consumers want premium products and are willing to pay for them. But that doesn’t mean they are not price conscious — 79% say that they are changing their shopping behaviour to save money on their purchases.

Although Latin American consumers are also willing to purchase digital goods and services using the internet, there is still a high level of openness towards the idea of shopping online for physical goods. Figures have shown that nearly 40% of consumers would be prepared to buy takeaways, beauty products and toys through their smartphone.

Today in Latin America, there is an increasing demand for e-commerce after years of recession. However, any merchant hoping to take advantage of available opportunities will need an extremely localised and directed approach to earn consumer acceptance, as customers are still extremely price conscious.

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Do Cryptocurrencies Have a Future or Are They a Passing Trend?

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In terms of the latest financial news, it is difficult to overstate the impact of cryptocurrencies such as Bitcoin and Ethereum. Not only are these anonymous electronic forms of payment quite convenient from the perspective of the average consumer, but they also represent very powerful investment tools due to their decidedly liquid nature. However, is this movement nothing more than a trend or are cryptocurrencies here to stay? Let us take a look at why these digital assets have proven to be so very popular before moving on to how they can be leveraged within the digital domain. 

The Primary Appeal of Electronic Currencies

Anonymity tends to be the most well-known trait of cryptocurrencies. In an era partially defined by hackers and potentially lethal viruses, it only makes sense that consumers have begun to turn to these alternatives when purchasing goods and services online. However, this is only the tip of the proverbial iceberg. Some other notable advantages directly attributable to cryptocurrencies include:

  • They are not governed by any type of central bank.
  • They can be bought and sold within mere seconds.
  • They may represent hedges against more speculative open-market ventures.
  • A growing number of retailers are accepting cryptocurrencies as a valid form of payment.

These are some of the reasons why those who are hoping to appreciate how to start a business are turning to such an interesting alternative. However, might cryptocurrencies fade into the digital background with time? Why do the majority of experts believe that these payment methods are undoubtedly here to stay? Let’s take a look at the rationale behind such observations.

The Role of Cryptocurrencies Within the Online Retail Sector

While the appeal of cryptocurrencies in terms of the online investment community continues to grow, it should be noted that this is a rather small segment of the global population. The real power of these electronic alternatives revolves around the individual consumer. Many individuals are now taking to the online community to purchase goods and services. However, they are also looking for an additional level of security so that their personal details are not at risk of becoming compromised. Cryptocurrencies fulfil both of these logical desires. 

Everyday consumers are less focused upon decidedly technical issues such as the value of the Bitcoin in relation to the dollar. They are much more keen to take advantage of a reliable means to purchase everyday products. This is the very same reason why major e-commerce platforms such as Shopify have begun to take ventures into this new digital medium.

The future of cryptocurrencies looks very bright and yet, even the most seasoned professionals do not possess the proverbial looking glass. While sometimes quite speculative from the point of view of a day trader, these digital payment methods should continue to appeal to the general public. This is also why it is fully reasonable to expect options such as Bitcoin alongside traditional methods including credit cards, wire transfers and PayPal.

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Blockpass Announces First-Use KYC Services to Hong Kong Brokers in Partnership with 2GoTrade

Digital identity verification provider Blockpass has announced its first mainstream financial integration providing its eKYC service to Hong Kong based broker technology platform provider 2GoTrade. This new type of integration is a first for Blockpass, as it enters the broker market offering best-in-class Know-Your-Customer (KYC) and Anti-Money Laundering (AML) verification services to the 2GoTrade network.

2GoTrade’s platform service meets most brokerages applications and IT needs, while keeping complex and ever-changing development and around-the-clock operation of software, systems, infrastructure, command control, compliance, and pre-post trade processing away from brokers’ core business – serving customer’s trading & investment needs. Its primary services support Hong Kong Exchange and global equity products as well as China A/B shares for retail and institutional brokers. 

Blockpass is a RegTech and Compliance platform which provides digital identity verification as a service. Through its network of partners, Blockpass is creating an ecosystem of pre-verified customers for easy and seamless customer onboarding for any regulated business and industry. The Blockpass portfolio of KYC Connect products allows businesses to implement the right solution for their needs through the use of an API.

This new integration of the Blockpass eKYC service will allow 2GoTrade to provide its 100 Hong Kong based broker clients with one-click customer verification, streamlining the process for brokers and customers alike.

Adam Vaziri, Blockpass CEO stated: “This is a particularly exciting integration of the Blockpass KYC Connect solution. By partnering with 2GoTrade, we are showcasing another unique and innovative use of our technology, and furthering the development of our ever-growing Blockpass ecosystem of customers and merchants.”

Jay Law, 2GoTrade CEO commented: “Blockpass KYC Connect is an ultimate customer onboarding solution for Financial Institutions in Hong Kong, and resonates well with the lastest SFC announcement (28-Jun-2019) on Remote onboarding of overseas individual clients; we are thrilled to be partnering with Blockpass in bringing cutting edge KYC technology to our broker clients for onboarding new retail customers, especially those from the mainland China.”

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Women in Fintech: Exclusive Interview with Julie Louvrier

At a time when women are woefully underrepresented in both the financial services and tech, TFT spoke to Julie Louvrier, Business Development at SuccessData. With over 17 years of experience working in fintech, we picked her brain on the state of the sector.

TFT: What is your opinion on women in tech and why do you believe this needs to change?

Julie Louvrier

Julie: I’m going to push an open door: women in technology are obviously as innovative, passionate and dedicated as their male colleagues. They design, they deliver, they question, they invent, they lead. However, they are much less present – they represent about 20% of the workforce. I believe this is due to multiple reasons but cultural bias is the biggest one. But I do believe that the lines are moving for women. Slowly, but irremediably because the corporate world is moving.

Take the example of banks, they are challenged by Fintech companies. This has introduced more inclusive structures, which are built on a model where less traditional skills are required, whatever the gender. And this forces the IT department at banks to rethink the way they recruit. For example, 20 years ago a man in a recruitment interview who asked if he could leave at 15:00 once a week to pick up his children, would have seen his candidacy rejected on the spot. But today the same question would be received in a very different way. This highlights the willingness of looking for a good life balance, which is actually reassuring for an employer! 

This new paradigm gives women more flexibility (because the number of dads who do the school run has increased over the last 20 years), but it also goes hand in hand with a real appreciation of skills hitherto stamped by women. For instance emotional intelligence. I certainly don’t want to say only women use their emotions in a professional context. But they tend to do it more freely, and it has been demonstrated how emotional intelligence is essential in all aspects of our careers.

There is still a way to go in order to have 50% of the technology workforce made up of women, but I see positive signs. I also know a bunch of IT companies who are really keen on recruiting more women, not because they have been asked, but because they understand more diversity means higher creativity!

“There is still a way to go in order to have 50% of the technology workforce made up of women, but I see positive signs.”

TFT: What are your future predictions for the tech industry?

Julie: I had the pleasure of attending the Women in Tech conference in London recently. Here I learnt an interesting fact from Dayne Turbitt (Senior VP at Dell). As you know, the demand for technologists is growing exponentially, however in years to come only 45% of the future jobs will be filled at current graduation rates. What do we do? Create more tech universities? That could take years!

The solution is opening positions to underrepresented populations and accelerating the career conversion or reintegration of women. Look at the companies that already have reintegration plans for women who stopped working years ago. These companies have perfectly understood that recruiting those qualified, very motivated women is absolutely paramount for their future growth!

TFT: To what extent does fintech operate on a level playing field? Would you say that the space has equality of opportunity? 

Julie: I have been working in the field of technology for banks for almost 20 years and have never witnessed discrimination in hiring or salary with women or minorities. However, I can tell you that I have always witnessed the difficulty to recruit in this area for lack of candidates. So gender has never been a question. And Fintech is a new industry built on inclusive values. 

“The game must certainly be changed from the earliest age in education”

But this should not prevent us from seeing the problem: too much homogeneity of the candidates looked for. This industry has to open up to more diverse university courses – as the school 42 tries to offer in France for example – or to a less formal careers – like hiring a stay-at-home mother back on the employment market. From my point of view, the problem therefore remains the number of women applying for a Fintech job rather than discrimination in hiring. But to change the situation, this requires a huge amount of work to be done beforehand with all the parties involved: women, to get them to project themselves into these careers; companies, to ensure they are not systematically looking for the typical engineer with a good university and linear CV.

TFT: What measures need to be put in place at a governmental level to quicken the glacial pace of change?

Julie: It is a complex question. The game must certainly be changed from the earliest age in education and the place that is given to technology in the universe of girls in school and university. It goes through the education system, but I believe it would be naive to think that it is up to the government only to deal with this issue. It is primarily the parents, but also the companies through their offers and their communication, that must work to change the perception of girls and women vis-à-vis their own interest in technology! Then, at the level of employers, the possibility of incentives to recruit off the beaten path should certainly be explored further.

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N26 Launches in the US

N26 is launching its banking app in the US. Starting in a staged rollout, the 100,000 customers on the US waitlist will be invited to sign up and have full access to the product. A full public launch will follow later this summer.

The launch in the US market marks the next step in the company’s mission to become a bank that millions of customers around the world love to use.

“The US launch is a major milestone for N26 to change banking globally and reach more than 50 million customers in the coming years,” says Valentin Stalf, co-founder and CEO, N26. “We know that millions of people around the world and particularly in the US are still paying hidden and exorbitant fees and are frustrated by poor banking experiences. N26 will radically change the way Americans bank as it has done for so many people throughout Europe.”

N26 already has a strong presence in the market, where it operates via its wholly-owned subsidiary, N26 Inc., based in New York. Since opening its office in New York, the company has been able to gain valuable insights on the US market and consumers, which is reflected in the development and rollout of the US product behaviour. The US team already consists of over 50 employees.

“We’re very excited to bring our experience to US customers. In Europe, we’re loved for our effortless and sleek user experience, with no hidden fees. Starting today, you can sign up entirely from your phone in just five minutes. There are no account maintenance fees or minimum balances required.” says Nicolas Kopp, US CEO, N26 Inc.

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With Libra, Has Crypto Finally Found a Way to Go Mainstream?

By Matt Harrod, VP of Europe for

Ever since Bitcoin was launched back in 2009, cryptocurrencies have struggled to scale up and grow into a viable means of paying for everyday goods and services.

Matt Harrod, VP of Europe for

However, following the recent news from Facebook regarding its new digital coin, Libra, could this all be about to change? Given that Facebook’s social network is used by almost two and half billion people around the world – not to mention the company’s many other social platforms, like WhatsApp and Messenger – could Libra be unique among cryptocurrencies in having the critical mass and momentum necessary to become a viable payment method in its own right?

Storms ahead 

However, Libra, like existing cryptos, faces regulatory hurdles that need to be overcome. Worldwide, national regulators are becoming more knowledgeable about cryptocurrencies and are developing global policies, alongside card scheme limitations, to bring them under the oversight of the relevant authorities.

In the case of Libra, the currency has faced pushback from authorities. Benoit Coeure, director at the European Central Bank Executive Board, has warned: “It’s out of the question to allow them to develop in a regulatory void for their financial service activities, it’s just too dangerous.”

The US Congress, meanwhile, has written to Facebook, asking it to halt development of Libra until lawmakers have had more time to investigate the ramifications of the company’s actions.

In spite of this negative reception, there are some countries that are exploring how to bring crypto into the fold, such as Estonia and Malta. However, if Facebook succeeds in creating a global demand for its digital coinage, all regulators will need to reconsider their lack of enthusiasm and prepare to follow in the footsteps of these pioneers. 

There are a few key reasons why lawmakers around the world have been reluctant to act on cryptocurrencies before now. A lack of understanding of how they work is one, while concerns about crypto’s potential to devalue local currencies is another. Many governments are also worried about the lack of transparency around transactions and cash flow, which could aid money laundering. 

could Libra be unique among cryptocurrencies in having the critical mass and momentum necessary to become a viable payment method in its own right?

Now that one of the largest companies in history is planning to launch a crypto of its own, these reluctant regulators now have to make a move in order to keep pace. Facebook has a habit of self-regulating and, if its initial announcement is anything to go by, Libra will be no different. Whether regulators will let them get away with this approach this time remains to be seen. Whatever happens, though, it looks likely that the rest of the industry will need to operate using Facebook’s playbook.

The plus points of Facebook’s involvement

Facebook’s move into the crypto space brings with it some major advantages for the industry. 

A major tech company, like Facebook, entering the market lends legitimacy to the concept of digital currency in the eyes of the public, helping to speed up the conversion of sceptics into believers. This will help to encourage more potential consumers to start using crypto in place of traditional payment methods.

In addition, it’s likely that other giants will join in. Apple, for instance, is already becoming increasingly payment focused with its ApplePay, so we can only assume it is a matter of time before it joins in. 

It may turn out that newcomers like Apple will look to simply buy an existing cryptocurrency, instead of developing their own product from scratch. This will foster innovation in the market, providing investment to support the research and development. Working in tandem with the changing legislative landscape, this will serve to create a radically different and exciting industry.

Doubtless, many will see this as a weakening of the core ideal of cryptocurrency. After the economic crisis of 2008, Bitcoin evolved to take back control from the financial institutions that caused the hardship. What we are seeing now is that the financial control is being transferred from financial corporations to tech corporations who, some argue, already have too much power and control over users’ data. It will be interesting to see how this evolves in a world that is increasingly trading personal information for convenience.

Watch this space

It has been said that Ethereum and Bitcoin are the crypto equivalent of Myspace, and everyone is on the hunt for the sector’s answer to Facebook. With Facebook itself getting involved and launching its very own digital currency, it could well be the case that we have found it.

However, we cannot be certain – we need to watch and wait to see if Libra really is the digital coin that brings crypto to the masses.

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