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One of the industries that offer many rewards and a high level of job security is the banking industry, and there are many different types of jobs that you can do within this sector. As a global industry, a job in banking could lead to all sorts of opportunities and means that you can look forward to a very bright future.

Of course, you need to prepare properly if you want to get into a career in this sector, although the amount of preparation you need to do will depend on the type of job you want. One thing to remember is that there are many opportunities for progression in banking, so even if you start at a lower-level position, there is nothing to stop you from learning the ropes and moving onward and upward to better positions within the industry. In this article, we will look at some of the benefits of a career in banking.

Some of the Key Benefits

Many people enter a career within the banking sector because there are so many benefits to look forward to. Some of the main ones are:

Lots of Job Options

The banking sector is huge, and this means that there are many great job options to cater to a variety of preferences, interests, and qualifications. You can go into junior positions such as bank clerks and cashiers, look at administration positions behind the scenes, or you could go for more senior positions such as investments, management positions, and more. With so many different opportunities, you can easily find a position that is going to be suited to your needs and skills.

Room for Progression

Another of the major benefits of going into a career in banking is that there is so much room for progression. As mentioned earlier, many people enter this industry in junior roles, but with hard work and commitment, they work their way up into executive positions. You can also take courses and training to boost your career within the sector and use resume guides to boost your chances of success. This means that you can look forward to higher earnings and more benefits as well as a secure job within a fast-moving industry.

Excellent Rewards

One of the additional things to keep in mind is that the banking sector offers excellent benefits to employees, and this means that you can enjoy some serious perks when you land a job within this industry. From a great salary and pension to bonuses and incentives, you can look forward to a lot of rewards when you get a job in banking. Of course, as you progress, the rewards and incentives increase, and this gives you more motivation to do well within the banking sector.

These are some of the many benefits that you can look forward to when you forge a career within the banking industry. 

Accelerated by the pandemic and empowered by the latest technological advancements, it has quickly entered people’s lives and aligned with the demands of businesses. 

Statista predicts that the number of US citizens using digital banks will hit 216.8 million. Among the reasons why consumers turn to online banking are the ease of use, security, and extensive banking capabilities available within their favorite solutions. 

The concept of digital banking admits easy and swift money management, performing fund transfers and online transactions, payments automation, and more. Modern banking solutions provide the ability to operate with digital currencies, introduce asset management, and provide comprehensive lending options.

The reasons for developing digital banking platforms are many. Let’s figure out what the process of financial mobile app development is like and how to start an online bank.

A quick overview of the digital banking market

The market for FinTech services is growing exponentially, and it’s projected that by the end of 2022, more than 65 percent of the US population will be banking online. 

The target audience for digital banks

Taking into account their lifestyles and aspirations, Millenials and Gen Z representatives are considered to be the most active mobile banking users. At the same time, the share of online banking users aged 50+ has also grown in recent years.

While Millennials turn to online banking to make the most of online transactions, peer-to-peer transfers, and cashback, the representatives of older generations may benefit from obtaining information about bank products, receiving mobile payments, and tracking their balances online.

So, deciding on the audience to target with your banking product, you better take into account the needs of different age groups.

Popular online banking solutions

Some banks make digitalization a part of their transformation strategy and FinTech businesses provide digital banking without having any brick-and-mortar branches behind. The latter is often called neobanks or digital-only banks. To operate legally, they partner with bank license issuers and distribute virtual and physical cards just like traditional banks do.

Among the most popular banking solutions that provide digital services are:

Each success story has a tedious formation process and hours of work behind it. Now, let’s figure out how to develop a digital bank.

How can you develop a digital bank?

Banking software development requires a deep knowledge of the market. This includes understanding the legal part, complying with the industry requirements, and bringing to the table hands-on technical knowledge.

Getting started with digital banking, make sure you’ve figured out the things to do first and have in place all the assets to get you covered.

Among the challenges you may face on this way are:

Clearly understanding your business goals, following the security best practices, and partnering with a reliable financial software development services provider are the key principles for creating a successful digital solution.

Must-have features of digital banking apps

Deciding on the features to add when you start a digital bank, it’s essential to understand the needs of your audience. Think of the ways to realize your ideas and evaluate the resources you can count on to implement the desired functionality.

Consider starting with the product MVP and then gradually rolling out additional features. This approach will help you meet the time and budget constraints and evaluate your success on the go. 

Most mobile banking solutions are equipped with the following must-have features:

With this basic functionality, your application can soon evolve into one of the custom banking solutions providing its users with:

How to monetize your digital banking app

So, how do you make money from developing a digital bank? 

As a rule, FinTech solution providers get some profit from:

  1. money on cards, which is getting some share from customer deposits;
  2. transactions, meaning that a part of the interchange fee is split between the card network (Visa, Master Card) and the bank card issuer.

You may also consider offering a part of your banking functionality as a premium tier, adding some insurance options, increasing your product LTV by introducing BankID, and targeting your customers with PPC advertising.

Providing your customers with real value and adjusting your solution as their needs change with the product change is a winning strategy you should take with you when developing a digital bank.

 

From chatbots to credit underwriting to stock market predictions, there is no shortage of use cases of machine learning in banking.

Despite the fact that risk management has always been at the top of banks’ agenda, many processes are still plagued with inefficiencies that are continuously draining bank resources. In this article, Andrey Koptelov discusses how banks can apply machine learning to streamline regulatory risk management and advance their fraud detection methods.

Streamlining regulatory change management

In the banking context, risk management and regulatory compliance are closely aligned. Banking employees have to manually monitor updates of thousands of regulatory documents, which involves visiting the websites of regulatory authorities and sifting through countless policy documents. This process is not only extremely resource-intensive but also error-prone and overall ineffective.

Machine learning can be used to automate a major part of the regulatory change management process. For example, Compliance.ai, a Silicon Valley startup founded in 2016, provides an ML-driven platform that helps banks keep up with regulatory changes. Using NLP and machine learning, the Compliance.ai platform automatically sources all relevant regulatory content from financial authorities, whitepapers, and news media. Importantly, when significant regulatory changes have taken place, the tool immediately alerts compliance officers.

Bank of Marin, a commercial bank that primarily operates in the Bay Area and has over $2 billion in assets, turned to compliance.ai to streamline its regulatory change management processes. Now Bank of Marin employees has access to all relevant regulatory content in one place, which significantly simplifies regulatory change management. As reported by compliance.ai, the Bank of Marin got returns on its investments in a short time by decreasing the number of resources for compliance.

Optimising stress testing

After the 2008 financial market crash, financial authorities substantially strengthened reporting requirements to ensure that banks can withstand significant economic downturns. This is why financial institutions need to routinely define and report their solvency to stay compliant, and banks with $50 billion or more in assets have to have their risk management teams conduct stress tests.

While undoubtedly important, these risk assessment processes often require hundreds of field experts and inordinate amounts of hours to complete. Moreover, finding relationships between various economic variables in relationship to banks’ performance is an increasingly complex and resource-intensive task.

Machine learning can help compliance experts to identify which exact combinations of values can cause risks, increasing reporting accuracy and decreasing the time it takes to complete these tests. This is exactly why Citi, one of the world's largest financial institutions that operate in 98 countries, joined forces with Symphony AyasdiAI to develop an ML-driven risk forecasting model.

Citi’s ML-driven stress testing solution

Prior to machine learning adoption, Citi had a hard time passing the annual Comprehensive Capital Analysis and Review (CCAR) conducted by the US Federal Reserve. CCAR requires a bank to submit its annual capital plans to the Fed to prove the bank's ability to deal with severe economic shock. Given the sheer number of economic variables at hand, Citi’s increasingly manual modelling approach took too long to complete, leaving business leads little time to understand the logic behind the models. As a result, Citi couldn't confidently defend its models in an annual submission to the Fed.

To create an accurate revenue forecast model, Ayasdi started with enriching the macroeconomic variables stipulated by the Federal Reserve. Then, Ayasdi used its proprietary machine-learning software to reveal how exactly these variables impact the revenues of each business unit. This allowed the company to define which unit-specific variables have the most impact on revenues. The detected variables were then used to create a custom ML-powered model that can accurately predict business units’ revenues under stressful economic conditions. As a result, Citi has managed to make this compliance process three times faster and less resource-consuming.

Enhancing fraud detection

Since the beginning of banking, fraud in its various shapes and forms has always been a persistent problem for many financial institutions. While many banks use sophisticated fraud detection systems, the rule-based nature of these solutions leads to a high probability of false positives. Importantly, fraudsters also keep innovating, which makes banks’ fraud detection systems grow obsolete.

Machine learning models, on the other hand, can learn and evolve together with the fraudsters. In very simple terms, a machine learning model can detect unfamiliar deviations from the normal pattern, notify the human employee about it, and, based on human feedback, learn if this kind of deviation is the new acceptable pattern or a case of fraud.

Just a few months ago, IBM launched a new generation mainframe that allows financial institutions to conduct fraud analysis of 100% of their transactions in real-time. To compare, around 10% of transactions could go through an AI-based fraud detection engine. In a nutshell, this means that banks that use the z16 mainframe can significantly reduce the number of false positives and increase customer satisfaction.

Conclusion

Risk management is a natural playground for machine learning. With the amount of data that banks have accumulated in the past decades, it’s only right to use the technology for its analysis. Machine learning models can drastically increase the accuracy of forecasts, decrease operational costs, and make risk management more effective overall.

The move from one of the UK’s largest banking groups, Lloyds, is a prime example of how the industry is adapting to consumer trends and the shift to online banking. Statistics show that in 2007 around one-third of consumers used online banking. Today, more than 90% of consumers conduct most of their banking needs online.

This shift in behaviour has gradually changed the industry, but it is clear that the future of the financial services industry is digital. However, the closure of bank branches has forced a seismic divide between those who prefer to bank online and those who don’t. It has also raised many questions about the readiness of our high-street banks when it comes to supporting this divide and future-proofing services.

Amid these branch closures, how can banks ensure that they are supporting all customers, both online and via the high street?

It’s true, not all consumers are willing or capable of making the digital change, and there will always be those who prefer to bank manually. As banks continue to accelerate their digital transformation, the closure of more high-street banks is inevitable. As a result, those who prefer to bank in person could be left in the dark when it comes to managing their finances.

We’ve seen some banks providing hands-on support at their branches for those unable to access digital services at home. This approach has helped to improve accessibility and increased education around digital initiatives. It has also encouraged increasingly more people to embrace digital ways of banking. The industry and regulators are also focusing on introducing plans to support those who are less digitally experienced.

What are some of the initiatives that the industry and regulators are putting in place to support those who prefer to continue banking via the high street?

Recently, a pilot agreement was launched for banks to share services to support the local community and the future of cash. Large banks across the UK will assess local needs every time a branch closes. The assessment could recommend a shared branch opens, an ATM installed, or a Post Office is upgraded. Banks will commit to delivering whatever is recommended to support those customers who prefer to bank in person.

What’s more, the Financial Conduct Authority has proposed that banks will have to provide a more detailed analysis to justify closing a branch. The FCA will also have the power to ensure local communities across the UK have access to cash and banks who don’t comply could face fines. This will make sure that in those areas where digital adoption is not common, access to physical services will remain a priority for banks.

These are promising initiatives, but the industry must do all it can to ensure these initiatives are widespread. It must also continue to think outside the box, innovate and develop other initiatives aimed at those reluctant to embrace digital banking.

How can banks focus on innovating and continuing to improve and develop the digital customer experience, while catering for all customers?

There is no denying the dramatic shift in consumer behaviour to digital. This should be taken as an opportunity for banks to future-proof their services and improve the online customer experience.

However, the extensive use of legacy technology within banks, means the speed at which these established institutions can bring new services to life is often too slow and outdated. This challenge is also complicated by a lack of industry standards, meaning that banks continue to be restricted by having to choose partners based on their language and the way they’re able to transform the bank.

To truly digitise banks, they need to overcome these obstacles surrounding interoperability with a coreless banking model. This approach to transformation empowers banks to select the software vendors needed to obtain the best-of-breed for each application area without worrying about interoperability and being constrained to those service providers that operate within their own technical language or messaging model. By translating each proprietary message into one standard message model, communication between different organisations is, therefore, significantly enhanced, ensuring that each solution can seamlessly connect and exchange data.

Are there additional approaches that banks should be considering to further enhance the customer experience?

In addition to taking a coreless approach to banking, banks must form an ecosystem alongside FinTechs, service providers, and aggregators. This will help banks when it comes to the speed they can introduce new products, which in turn will support the customer experience.

An effective ecosystem strategy will make banks more relevant to their customers, creating an opportunity to drive better relationships and bigger wallet shares by providing the speed, scale and differentiated products that make the most of the opportunity presented by the significant shift to digital banking. If banks fail to take this approach, they will struggle to survive as consumers continue to demand new, digital services aligned to their needs.

So, what can banks do to prepare for the future and make sure they are providing for all customers?

While we anticipate that there will continue to be more high-street branch closures, the industry must continue to adapt based on the needs of every single customer. Failing to do so only means that customers will leave for a nimbler competitor who understands the customers both now and in the future.

This may seem like a hard weight to bear for many across the sector. By taking a core banking approach to transformation, however, supported by an effective ecosystem – banks will benefit immensely. If banks continue to focus on the balance between maintaining previous methods of banking and the development of new and innovative services based on the needs of every customer, the future will be bright.

For example, over the COVID lockdowns, business lending in the EU increased by an average of 5.3 per cent, with banks struggling to keep pace with the steep increase in demand. With a recession looming we can expect another increase in business loan applications and financial institutions need to be prepared.

Over the coming months, lenders will need to move fast to process these increasing loan applications. But not all will have learned the lessons of the pandemic and invested in the digital infrastructure that allows them to scale and pivot at pace.  The laggards need to move now, employing up-to-date technology and automation solutions so they can work faster and more efficiently. Otherwise, customers will vote with their wallets and look elsewhere for their banking needs.

The cloud’s silver lining

The first step for banks looking to boost digital innovation is a shift to the cloud.  Today’s customers expect banking processes to be as easy and efficient as online shopping. This can only be achieved through the scale and agility provided by cloud technology

Cloud computing provides lenders with secure and agile infrastructure on which they can more easily streamline business processes, deploy new solutions and enable innovation to meet the speed at which customer expectations evolve. For banks looking to ready themselves for an increase in loan applications, cloud infrastructure will let them automate many parts of the customer journey, from application and KYC, through to approval and account management. For example, Cynergy Bank’s use of identity verification automation through its cloud-based platform cut onboarding time from three days to 54 seconds.

Another benefit of using cloud-based systems is the ability to scale more easily. Traditional banks’ legacy architectures make continuous evolution more difficult, as upgrading hardware is often both time-consuming and expensive. In contrast, cloud technology, often used by neobanks, is far nimbler, with the concept of growth an inbuilt characteristic. 

Keeping pace with the customer

Customer-centricity should be the ultimate priority for any bank, whatever the economic climate. It is no longer enough to be able to access banking amenities from your sofa, they need to be available 24/7 and easier to navigate than ever before.  

People say that television killed our attention span, but the pandemic finished off our patience.  

The good news is that, in the UK, banks have already invested in the cloud infrastructure to stay ahead of customer expectations. For example, Yorkshire Building Society knew that to maintain strong customer relationships it needed to move away from manual processes and allow employees to be more efficient. A shift to the cloud has enabled the organisation to become 90% paperless with staff spending less time searching for information on spreadsheets and more time accelerating customer service. This change has seen the Commercial Lending Department reduce the amount of time it takes to produce offer letters and facility agreements for customers by 75%.

Similarly, Santander UK has been able to use cloud computing and digital tools to stay ahead of customer expectations. Technology investment has enabled faster loan origination and decisioning, ultimately improving the overall customer experience.

This speed of service will be critical as banks scale up to better support customers over the coming downturn. However, it is not too late for those who have not yet embarked on the digital journey. Cloud solutions can be seamlessly implemented within a short period of time; start now and you and your customers will soon reap the rewards.

About the author: Thomas Chaplin is Head of Mortgage Product at nCino, EMEA.

These important developments in IT infrastructure will significantly shape the fortunes of financial institutions over the next decade.

Investment in cloud infrastructure must increase because banks will need to create new products, services and experiences to meet expectations from consumers and commercial customers. Intense fintech activity, either by partners or competitors, is also pushing banks into the cloud as the necessity increases for infrastructure that generates greater organisational flexibility. Market research company IDC estimates that to meet new demands and provide new services, banks’ global cloud spending will rise by more than 16% each year up to 2024, hitting $77 billion annually.

Soon, however., banks’ attention will be on the edge, moving processing power closer to the end-user or customer. We have entered the new age of open banking, app-based financial management and the steady expansion of 5G mobile connectivity. The banking world, like almost every other field of business, will become data-driven. Financial organisations will use the edge to create new models of service and hyper-personalised experiences using big data and artificial intelligence (AI) in combination with 5G and highly advanced application design.

The edge will enable banks to easily expand into products based on crypto-currency, non-fungible tokens (NFTs) or stable coins. Custody and trading solutions, prime brokerage services and blockchain-based compliance solutions will be part of this evolution. 

Organisations will transform all their processes, enabling near-instantaneous completion of transactions, settlements and decisions on loans, credit, or insurance. And to compete with global app-based lenders and service providers, banks will have to provide the slick interfaces and ease of use that increasing numbers of consumers take for granted. Competitiveness in consumer and business banking will be about providing a great experience. The dynamism and fast reactions that are essential for these key developments are only available from cloud and edge computing, delivering the necessary speed, low latency, flexibility, and scalability.

Hybrid infrastructure with edge

Yet just as UK financial institutions move into the cloud, the Bank of England’s Prudential Regulation Authority warns against the dangers of vendor lock-in and reliance on individual providers. Data sovereignty laws also continue to make relationships with US hyperscalers potentially dangerous.

Given these constraints, it is obvious we will see banks adopt hybrid infrastructure, combining public cloud and on-premise data centres. This will strike the balance between flexibility and security, so banks locate data workloads where they work best or are best protected. Edge computing will grow in tandem as financial organisations deploy artificial intelligence-based solutions and sophisticated mobile applications.

Using 5G mobile connectivity rolled out by the telecoms companies, edge computing removes the disadvantages of location, shifting data and workloads to regional data centres to deliver faster, low latency responses for end-users. This has clear benefits for financial institutions seeking to offer highly personalised and responsive payment platforms, for example. Any solution depending on location as part of its decision-making needs to process data in an edge computing environment.

Aside from consumer and commercial applications, the edge also has significant potential for investments and markets, delivering high-speed trading capacity anywhere in the country.

Accelerating adoption

The adoption of hybrid cloud infrastructure that includes edge computing will accelerate over the decade, thanks to the creation of nationwide edge computing platforms and the development of effective implementation methodologies. Banks can prioritise data and applications for deployment, whether on-premise, in private clouds, colocation data centres, public cloud or with the providers of national edge platforms.

Colocation can be highly attractive because a bank locates its own IT in a secure and efficient data centre run by specialists. The more advanced colocation and cloud providers are compliant with PCI (Payment Card Industry) data standards, enabling secure use of the full range of card payment technologies. Some providers may also comply with the US’s SOC 2 requirements governing customer data.

New applications and revenues with greater freedom

This is all about flexibility and making advanced, revenue-generating AI applications available almost anywhere. At the same time, business-critical applications that are not cloud-compatible remain on-premise. Banks gain the remarkable computing and data management capabilities of individual public cloud vendors without fear of lock-in or being constrained by providers’ operational practices.

New-generation management tools designed for hybrid infrastructure enable financial organisations to monitor all their data and applications and to optimise all their deployments in the cloud and at the edge. Banks can generate workloads to meet peaks in demand, avoiding excessive expenditure without the risk of missing new business opportunities.

Hybrid cloud and edge computing are inexorably part of the future of banking, given the arrival of these new cloud management platforms. The next ten years should see the most forward-looking financial institutions gain the flexibility and innovation of the cloud and the devolved power of edge computing. Maintaining sensitive data and workloads in secure locations, these organisations will develop highly advanced, hyper-personalised applications and new business models throughout the decade, confident they can flex, re-evolve or scale whenever need be. They will become fully data-driven and dynamic, realising the vast potential of hybrid infrastructure and edge computing

About the author: Simon Michie is CTO at Pulsant.

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The World Bank's Financial Inclusion Global Initiative, for instance, supported reforms in countries with low bank account penetration, with the goal of achieving universal access. Similarly, the US launched several initiatives aimed at identifying and addressing the reasons for exclusion, while the EU gave its residents the legal right to open a basic bank account. 

But if these initiatives improved financial inclusion to some extent — there are currently 1.7 billion unbanked adults, down from 2 billion in 2014 — they have one critical flaw. They assume the solution to financial exclusion is invariably access to a traditional bank account. But what if that weren't the case? In fact, what if the unbanked and underbanked didn't want bank accounts?

'Sorry, not interested.'

For those of us who have always taken access to the traditional financial system for granted, it may be hard to understand why someone wouldn't want to have a bank account. But research suggests this is relatively common among the unbanked. 

According to a Financial Conduct Authority report, a third of the UK's 1.3 million unbanked used to have a bank account but don't want to have one again. Likewise, 56.2% of unbanked Americans say they aren't interested in having one. The numbers tell similar stories elsewhere around the world. 

In many regions with low uptake — Mexico and the Philippines just to name two examples — significant proportions of the unbanked report not wanting bank accounts. So what are the reasons for this? And what do they tell us about current initiatives to improve inclusion?

Who are the un(der)banked?

The single biggest reason the unbanked give for not wanting bank accounts is financial. 

Unbanked Filipinos, for instance, cite not having enough money to meet minimum account-opening thresholdsSimilarly, almost half of unbanked Americans — 48.9% — say they don't have enough money to meet minimum balance requirements, that is the minimum they have to keep in their accounts to avoid paying maintenance fees. And unbanked UK residents say they've struggled with fees and overdrafts in the past and don't want to go through the experience again. 

Given that the vast majority of the unbanked are vulnerable or come from lower socioeconomic backgrounds, this shouldn't come as a surprise. For someone on a low income, minimum deposits, minimum balances, and other fees create steep barriers to entry. But eliminating such barriers — even if it were possible — isn't a cure-all. 

Because low-income salaries are often paid at least partially in cash — tips, for instance — using a bank account may simply not be practical, particularly now that banks the world over are shrinking their physical footprints

Computer says no

While financial status is the main reason people choose to remain unbanked, it's not the only one. Newly-arrived expats often report struggling to access the financial system in their host countries, usually because they're unable to provide documents such as utility bills, pass credit checks, or fulfil other requirements.

Lack of trust in the financial system and a desire for privacy also loom large in people's minds. In the US, for instance, they're the second and third biggest reasons for not having a bank account.

More to the point, digitalisation — which is all too often depicted as a panacea — is having the unintended consequence of worsening exclusion, especially for those who can only pay in cash. 

Charity AgeUK observed that: 'While cash use has declined... it would be a mistake to assume that everyone in our society is willing or able to make all their financial transactions digitally.

'Being able to use cash helps people on a low-income budget more effectively, pay back a carer or friend who shops for them, as well as acting as an essential back-up for those who are not online or who live in an area with poor connectivity. Many people with health conditions, disabilities and dexterity issues find paying in cash much easier than with a bank card or a phone — it’s not easy for someone with sight loss to use a card reader, or someone with bad arthritis in their hands to hit the right buttons on a smartphone.'

BaaS: Tackling exclusion by putting people first

While initiatives aimed at increasing financial inclusion undoubtedly have the best of intentions, there's clearly a mismatch. Instead of devising solutions around people's circumstances, they often push them towards a solution that may not meet their practical needs. 

It's all well and good to improve access to bank accounts and digital financial services. But this won't make using them any more feasible for those on low incomes, the vulnerable, and those who don't trust the financial system. 

The good news is that traditional banks and fintechs are no longer the only entities that can deliver financial services. Nor are bank accounts the only way people can gain access to the financial system. With BaaS — banking-as-a-service — we have an opportunity to enable the unbanked and underbanked to start engaging with the financial system on their own terms. 

BaaS's potential lies in the fact that it makes it possible for any company to offer financial products tailored to its customers' needs, without having to become a bank. Consider cash.

With eCash products like Paysafecash, petrol stations, supermarkets, chemists, off-licences, and other retail outlets people already use and trust can be used as a cash-in/cash-out infrastructure for accounts or for a wide range of bill payments by simply scanning a barcode generated for an individual transaction. 

Another option is to exchange cash for a pre-paid voucher, like paysafecard, that can then be used to pay online. Or, the outlet can start offering branded digital wallets customers can use to pay and get paid. Unlike traditional bank accounts, these wallets are easier to open and don't have overdrafts, maintenance fees, and other charges that can make them impractical or unaffordable.

And those are a few out of hundreds of potential use cases, some of which we may not have even thought of yet. 

Put simply, the power of BaaS lies in giving banking contextual relevance, making financial services products available in the channel and format that makes the most sense, instead of forcing people to engage in ways that don't work for them. 

Why try to square circles, when you can meet people where they are?

Bank accounts are a means to an end, not a one-size-fits-all solution.

It’s important to remember that for the financial system to be truly inclusive, it must be relevant to the people it is intended to serve. BaaS is an opportunity to do exactly this. By empowering any entity to become a financial services provider and create products that are designed around customers' real needs, we can move away from standard offerings for the masses that are, at best, a plaster, and start tackling the root causes of exclusion. 

About the author: Udo Müller is CEO of eCash at Paysafe. 

At Paysafe, we've built a suite of BaaS products that enable you to offer a comprehensive range of products — from digital wallets to integrated payments and electronic cash — quickly and cost-effectively.  

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The Present

Over the last few years, customer payment preferences have changed significantly. Particularly, the COVID-19 pandemic accelerated the shift towards digital payment solutions like Alternative Payment Methods (APM). To highlight the importance of APM integration for businesses, Macropay’s CEO & Founder Adam J Clarke notes that “alternative payment methods are critical. [It is] life or death customer experience.”

This shift in payment and banking trends are also characterized by decentralization. Long gone are the days when customers visited a banking hall to make payments or deposits. In fact, mobile wallets and other open banking solutions even allow people without bank accounts to access loans. In turn,this shift in access to financing has accelerated the need for more flexible and fluid payment options.

For instance, businesses are no longer restricted by borders and can easily access new markets and clients. Globalization and digitalization have given birth to phenomena like drop shopping which lowered barriers of entry for new businesses. However, traditional banking is not evolving fast enough. This is evident in how banking restrictions still make it difficult for new business owners to open bank accounts. In addition, traditional banking tends to be more expensive in comparison to its alternatives.

The Past

Previously, payments and banking were controlled by a select few. Financing was centralized, flowing to and from a central bank. This meant payments took a long time as they needed to be verified by the middleman or central controller. In addition, the middleman needed to get paid, which made financial access expensive.

Similarly, access of loans was expensive and, in some cases, prohibitive. This is because customers need to prove their liquidity and provide “know your client” (KYC) documents to open an account. For some, these documents are impossible to obtain. As a result, 31% of the world population remains unbanked today according to World Bank statistics.

However, the rise of mobile wallets, for example, has meant anyone with a smart phone and internet access can access a new way of payment and banking. Businesses now have access to more clients as a result. That is if the business is able to offer clients their preferred payment option.

The Future

As client preferences evolve, businesses must keep up in order to stay relevant. With so much change it might be tempting to assume that we have reached the pinnacle in payment evolution. However, Macropay CEO Adam J Clarke begs to differ. He believes that “the great tech revolution is just beginning, and that AI is the future of tech which will continue to change the way the world works.” 83% of financial service executives agree according to Forbes.

Conclusion

As we become more of a cashless society, Artificial Intelligence (AI) will help make digital payments more secure. Cybercrime and digital fraud currently make online payment solutions very risky. AI allows for the early detection of potentially fraudulent activity or a breach in security. This is one of the main reasons why Macropay utilizes both cutting edge technology and AI. 

The momentum behind the global neobank movement shows no sign of slowing down in its challenge to incumbent banks. Last month, Nordic neobank Lunar raised USD$77M in additional Series D funding, which valued the bank at more than USD$2B. The Aarhus, Denmark-based bank, founded in 2015, also launched a crypto trading platform and B2B payments for small and medium business customers.

On the other side of the world, in February Indian neobank Niyo raised USD$100 million in a new financing round and announced plans to add lending and insurance to its offerings. Niyo was also founded in 2015 and claims to have more than four million customers, with 10,000 new users signing on each day.

The well-known neobank model

After several years, the neobank model is by now familiar. Most operate exclusively online and offer customers digital-first, mobile-friendly products and services, often with lower fees and lower interest rates, and accessible via an easy-to-use smartphone app. Services vary from basic online banking and debit/credit card to loans, investments and savings: up to merchant accounts, insurance - and even equity trading and cryptocurrency.

Neobanks typically start off by specialising in particular products and services. But for many, the ultimate aim is to build a multi-country, full-service digital bank offering multiple products and services - including current accounts, loans, international payments, insurance and investments.

New technology means fewer financial burdens

Unlike incumbent banks, neobanks don’t have the financial burden of staffing and managing traditional physical branches. They also benefit from not having legacy technology assets and overheads to maintain. They can pursue profitability without the cost burdens of infrastructure, physical premises, staff, and - initially, at least - shareholder dividend payouts.

Neobanks’ use of cloud technology means they avoid having to spend heavily up-front on expensive IT infrastructure. And thanks to standardised open banking APIs, neobanks can build and bring to market products and services that enable faster, more frictionless fund transfers between account holders, other financial providers, and transactions with merchants.

With these foundations in place - and sustained by a steady flow of private equity cash - neobanks are free to focus their time and effort on creating and launching easy-to-use current accounts and other products that prioritise a top-notch customer experience.

They also have the freedom and flexibility to come up with other innovative digital-based services for customers to access and use online or on their mobile phones. They can test and then roll out new digital features and products quickly and easily - and then tear them down just as quickly and easily if they don’t work out.

With these foundations in place - and sustained by a steady flow of private equity cash - neobanks are free to focus their time and effort on creating and launching easy-to-use current accounts and other products that prioritise a top-notch customer experience.

Taking on customer frustrations

The rise of neobanks comes at a time when customers have become dissatisfied and frustrated with established incumbent banks for a number of reasons - a lack of transparency, an absence of useful new features, plus hidden or expensive fees for everything from overdrafts to closing your current account and moving to another bank.

Focusing on customer frustration and other pain points is central to neobanks’ ongoing success. As consumer trust in neobanks grows and users become more confident and familiar with technology, incumbent banks are set to lose customers and market share.

Reaching niche and underserved markets

The retail banking market is overcrowded. But neobanks are finding pockets of opportunities with significant but underserved sub-markets - such as millennials, gig economy workers and micro-businesses.

It's an approach that’s paying off. Neobanks are squeezing the market share of older established banks from both ends: at one end, with personal accounts and other consumer-facing services, and more recently at the other end with business-focused offerings such as buy-to-let loans for property investments and bridging loans for small businesses.

Banking after the pandemic

Neobanks were already in a strong position before the Covid-19 pandemic. But the consequences of the pandemic have created new opportunities for them.

Small and medium businesses need access to extra credit to help their recovery from the economic slowdown caused by Covid-19. In addition, people who were stuck at home during national lockdowns are now using online and mobile banking services significantly more than they did so previously. These changes have reportedly accelerated digital banking’s progress by up to ten years.

Neobanks are set to benefit from these developments. But if neobanks can benefit, so too can incumbents. However, to do so, they must abandon their outdated methods, overcome their reluctance to change, and adapt their operations and their mindsets to customers’ changing needs and wants.

Make digital the priority

Wherever possible, incumbents need to emulate their younger, more agile rivals. They must prioritise digital - in particular mobile. Many incumbents currently spend their money in the wrong way, on large, multi-year IT projects that eventually lead to the launch of new services. But this approach takes too long and is too expensive.

It’s a similar story with new apps and features. At the moment, a new app developed by an incumbent gets held up for at least a month in a staging area where Risk and Compliance will test and check it. That’s crazy.

Accelerate time to market for new services

The answer is to implement test-driven development. Here at Buckzy, we want our developers to write code: submit it: and 30 minutes later it’s in production. We’ve automated black-box testing and UAT (user acceptance testing), to ensure that the new features and functions we introduce are secure and don’t interfere with existing systems.

Time to market has to be the priority. At Buckzy, risk and compliance experts are part of our development teams and validate new code as it’s created, which accelerates the entire testing and resolution cycle and so reduces the time to market for new features and services.

Importantly as well, incumbents should take on board the idea, “don’t make perfect the enemy of good”. By this we mean that rather than delay the launch of a new product or service because it’s not complete, banks should not be afraid to launch it anyway, but then be prepared to make small incremental changes, updates, and improvements on an ongoing basis.

Fresh ideas and new approaches

In their ongoing contest with neobanks, the principal challenge for incumbent banks is to be more open to fresh ideas and new approaches. These might initially seem costly with no guarantee of an immediate financial return. But their value is longer-term and lies in restoring trust, retaining existing customers – and even gaining new ones.

Incumbents can ensure they stay trusted service providers to their customers by creating useful and worthwhile services that generate new incremental income, and which also define and drive the future direction of the wider industry.

For more information, visit https://buckzy.net/

Cryptocurrency has become somewhat inevitable in our world today. From being a relatively obscure proof of concept announced in 2008, it has become part and parcel of the global financial fabric.

Initially used by individuals to make purchases—such as the 10,000 BTC spent on a pizza—the industry continues to evolve and find use cases in almost every sector of the global economy. This evolution has led to its adoption by multinational corporations, who continue to find interesting uses for these digital assets.

The evolution in the crypto industry has led to the development of Decentralised Finance (DeFi), Non-fungible tokens (NFTs), Game-Fi and more recently, the Metaverse. Consequently, institutional adoption has continued apace. 

Global Fintech giants PayPal and MasterCard are looking to integrate crypto payments into their list of products. Electric car company Tesla and Software giant Microstrategy purchased Bitcoin and hold it on their balance sheet, as seen in their recently released Q4 reports. Adidas and Nike have announced NFT collections with their sights on the virtual world, while Microsoft has ventured into the Metaverse through its acquisition of Activision Blizzard.

Conspicuously, the banking industry has also wanted a piece of the action as institutional adoption rallies. Initially, the consensus was that it would be adversely affected by the emergence of crypto. However, both industries seem to be coexisting just fine.

Several banks globally have announced their intentions to integrate crypto services into their offerings. This would allow their customers to easily access the best of both worlds on one platform. 

However, the stakes have been raised even higher, as Wall Street banking giants JP Morgan recently announced joining the Metaverse. The move represents the first major bank to venture into this space.

JP Morgan’s Approach To The Metaverse

JP Morgan has opened a lounge in the blockchain-based Decentraland. The US bank believes its Metaverse branch will enable customers to create virtual avatars, establish virtual rooms, and travel in the 'Onyx Lounge’—named after its suite of Ethereum-based services.

The Wall Street behemoth plans to take advantage of prospective growth opportunities in the metaverse through its virtual presence. With the entire world at a critical crossroad, it believes that there isn't a single company or celebrity that is not considering or building an identity on the Metaverse. JP Morgan’s report said,

“The metaverse will likely infiltrate every sector in some way in the coming years, with the market opportunity estimated at over $1 trillion in yearly revenue. As a result, we see companies of all shapes and sizes entering the metaverse in different ways, including household names like Walmart, Nike, Gap, Verizon, Hulu, PWC, Adidas, Atari, and others.”

In its approach to the Metaverse, JP Morgan believes that if the digital world is to succeed, having a robust and flexible financial structure is critical. With this in focus, its strategy will ensure interoperability grows due to its payment and financial architecture. This infrastructure will ensure users can seamlessly interact between the physical and virtual worlds.

However, the bank issued a warning about the difficulty of building a corporate strategy in a dynamic environment as metaverse components evolve quickly. Despite this, it believes the cost and risks of engaging early and regularly to build intellectual property, develop a hypothesis and identify partners are minimal. It further buttressed that the high risk of being left behind justifies the small initial expenditure required to get started and explore this new digital terrain. It said,

“However, the costs and risks of engaging early and consistently in order to build internal intellectual property, develop hypotheses about future business models, and identify ecosystem partners and collaborators are relatively low.”

Opportunities In The Metaverse: What JP Morgan Sees

According to JP Morgan, the opportunities present in the Metaverse are limitless for both individuals and corporate brands alike. These available opportunities within the economy of the Metaverse—Metanomics—cut across virtually every market area with an estimated value of $1 trillion.

The dynamics of supply and demand are expected to push more people into the Metaverse and necessitate the development of new avenues to generate revenue. The creator economy will present enormous opportunities for its participants to develop products consumed in the digital world. Together with marketing and advertising, the service sector also offers another considerable segment within the Meta-economy. 

Consequently, it is estimated that by 2027, spending in the virtual world’s advertising market will reach $18.41 billion due to branding and immersive ad experiences. This potential also spreads to the service industry as a recent fortnight virtual concert grossed $20 million, including sales and merchandise. The event was seen by 45 million people as geographical and cost impediments were removed. This provides a glimpse of the potential of the metaverse.

As the augmented technology behind the Metaverse continues to grow, commercial activities will most likely occur. Consumers will purchase goods, and workers will earn money by working in the virtual world. Reports estimate that $54 billion is already spent yearly on virtual goods, with NFTs having a market capitalisation of $41 billion. This number more than doubles the total amount spent purchasing music.

Moreover, the Metaverse evolved from online gaming, especially multiplayer online games, which have developed their economies for a while now. The evolution of these games can give a picture of the potential in this digital world. Roblox, an established online gaming platform for developers to create games for immersive 3D experience, carries 60 billion messages per day. This far outpaces the number of texts handled by leading phone companies and shows that more people are interested in the virtual world.

The growth of the play-to-earn model in the virtual world has made it more appealing by incentivising the process for users. These remunerations earned can then be invested into an in-game asset, bringing about potential income and expenses such as rent, tax maintenance and repairs. This sentiment is backed up by the reported GDP of Second Life, one of the earliest metaverse games that reached $650 million in 2021.

The potential for projects in the Metaverse is enormous. This has led to the social media platform Facebook rebranding to Meta, seeing the company focus its efforts on the immersive virtual experience.

Mark Zuckerberg, Meta’s CEO, reiterated that one company would not build the metaverse. Rather a collective effort of developers and institutions would make the whole experience a reality. In the wake of this announcement, several metaverse tokens on the blockchain, including Decentraland and Sandbox, saw a surge in market capitalisation.

From the chart below, SAND has held the largest slice of the pie among the big players, while MANA and CUBE have taken second and third place respectively. The spike followed the announcement of this development in November last year which pushed the valuation of all three above $17 billion.

JPMorgan report graph

Source: JP Morgan Report

With this enormous potential available, banking institutions must get in early and take full advantage of them. A recent survey from Credit Donkey revealed that customers are willing to open new accounts if given a bonus. Through airdrops, we’ve seen a similar trend in the Metaverse. Such an incentive could be just what’s needed for prospective users to jump into the Metaverse and see what it’s all about.

There are rules and guidelines that must be followed/enforced while also ensuring that homeowners are abiding by the bylaws or policies of the organisation. Furthermore, there's the matter of upkeep on the property, making repairs or additions to the common areas, handling member dues, and participating in board meetings. Interfacing with homeowners to run the organisation efficiently is one of the key roles of a community manager but it isn't the only one. A lot of administration, budgeting, and handling of funds needs to occur throughout. To better accomplish this, the use of automation or software tools can be a significant help. Here are five business tools to help you with improving your property management.

1. Accounting Software

When considering the use of software to help streamline running a community, using software to handle accounting is probably the number one priority. Collecting dues, providing receipts, and complete transparency over the process are all something to think about. It's also crucial to be able to budget effectively and easily while having clean access to any pertinent financial reports. So the question is should you use accounting software or property management software? There are pros and cons to each one. The counting software can be inexpensive and multifaceted. It can have plenty of features, easy to use, and get the job done in most circumstances. On the other hand, it doesn't have many features beyond the basics. So, if you need to look back at previous data, find extensive reports, and get a comprehensive overview of all your properties you may need to go a little bigger. Accounting software is ideal for managing a few properties, but property management software might be better for managing a lot of properties. Property management software is usually pretty inexpensive per unit and can have a lot of the same features as accounting software, plus some additional benefits that make it so much easier to stay on top of the HOA's finances. The decision is ultimately up to the community manager, but it's best to weigh the options before making a final call.

2. Reserve Fund Administration

In an HOA, the reserve fund serves an integral function. In finance, the reserve fund is a predetermined amount of a liquid asset that's supposed to be available to handle future costs or expenses that may occur. In an HOA, this serves a vital function: to be available to use for repairs, maintenance, and emergency. So, administering the reserve fund is extremely important. Distinct from the operating fund, reserve funds are more of a backup plan. T best practice for reserve funds is to keep expenses written on a separate ledger and keep them in separate bank accounts from the operating fund. A reserve fund should have enough in it to handle future repairs and to be able to cover unexpected expenses. Lack of a decent reserve fund can result in homeowner issues, lack of capital, and big problems down the line. That's why it's so important to use whatever tools you have at your disposal to Monitor and maintain your reserve fund. Accounting software can help, along with some automation in tracking deposits, withdrawals, and expenses involving the fund. Automation is great for this sort of thing because it can help you spot issues early and take swift action.

3. Banking, Budgeting, And Payments

Getting some accounting software can help with this aspect of running the HOA, but you still need to oversee each of these factors. The best way to do that might be by getting some powerful property management accounting software instead of messing with multiple programs. This type of thing offers a comprehensive solution for banking, budgeting, payments, and more. How so? The property management software can handle electronic banking, take payments, help you budget in real-time, allow for payment plans, and even do batch processing. All of these work in tandem with one another to create a comprehensive payment solution that will benefit the entire organisation.

4. Vendor Management Portal

Part of any community manager's job is vendor management. Vendor management is simply a way to manage suppliers and vendors within an organisation. When applied to a homeowners association, the principles are the same but the practice might be a little bit different. When it's time to select the vendor, there should be a comprehensive vetting process to determine if there's going to be any third party risk from using that vendor. Third-party risk can lead to property, personal, reputational, or financial damage. The last thing you want is to hire somebody to build an addition to the common area and find out they're skimming on supplies and materials, or that they do shoddy work. So assessing the reputation and finding vendors that are going to be able to do the job for a reasonable cost is in the community manager's job description. Using some kind of vendor management software or utility is going to go a long way to helping assess those vendors and build a base of reputable vendors that the HOA can use as needed. There are dedicated vendor management portals specifically for this purpose, but some property management/tracking software also has it as built-in functionality. If it does, that may be your better bet for a one size fits all solution to vendor management challenges. Because maintenance and repairs are a part of the job, it's important to have quality tools to help.

5. Financial Reporting

Financial reports are also incredibly important for understanding where your money is going. If you want quick access to all of your reports that you can bring up during board meetings or with communications through members, then using a software repository is going to help. The property management software suites often have this function built in so you can find exactly what you want. No more coming through spreadsheets or random files. Everything is accessible and easy, a convenient location so that you can print it out on-demand or access it quickly to make the important decisions you need to make throughout your management career.

One person who has reflected a lot on the upsides, downsides, and services that various banks offer, is Ingeborg Tysse. She lives in Norway and shares her experiences with banks at Bank Erfaringer. She covers the likes of MyBank, Bank2, Svea Bank, as well as other banks that are widely used. Some of them are mostly in Scandinavia, and some, all around the world.

According to Ingeborg, there are a lot of factors that you need to consider when you are looking for a new bank. Some of the most important are:

What Banking Services Matter Most To You?

Banking services are a must-have for everyone who lives in the modern world (including you). They provide financial security and stability, and they don’t only exist to store your money; they exist to help you manage it well.

There are many different types of banking services, and different banks offer different services. Ingeborg says that this is probably where you will find the most important reasons for what bank to choose in the end. After all, there is not a one-size-fits-all when it comes to banks.

Below are the obvious banking services you should look for first:

Then, there is the question of how the bank offers these services. For example, do they have:

Depending on your needs and preferences, Ingeborg suggests that you use these bullet points as a compass for picking the bank that will be right for you in the long term.

Why Choose A Local Bank Instead Of A Big And Remote One?

Many people think that local banks are not as good as the larger, more well-known ones. But this is not true. Local banks can provide many benefits for any business or individual, which you will see below.

The first benefit is that you get a personal relationship with your bank. You don't have to deal with a call centre and can instead talk to someone who knows you and your needs personally. The second benefit is that it's easy to get access to loans and other financial services from a local bank without having to jump through hoops and wait in long lines at the big banks. The third benefit is that these banks are usually much more flexible in their requirements when it comes to checking account balances, credit scores, etc., which means they are more likely to approve your loan application and such things.

Why Choose A Big Bank?

According to an article on The Balance, the biggest banks provide the most convenience to their customers. They have the widest range of services to their customers and an easy-to-use interface that out-competes the smaller, local banks. These are all great reasons to choose a big bank.

It is easier for big banks to offer many services because they have more employees and more branches. Their size also means that they usually have more resources to pool into accessible ATMs where you can take out or insert cash, something that is all the more useful if you’re on vacation in another town in your country. Big banks also have better data security than smaller financial institutions because they can afford to invest in it.

Regardless of whether you choose to go for a local bank or a big bank, the most important thing is that you are happy with your own decision and that you have compelling reasons that are personally meaningful. In the end, it’s your bank account.

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