Finance Monthly March 2019 Edition

10 www.finance-monthly.com NEWS - MONTHLY ROUND-UP THE MONTHLY ROUND-UP IS AMAZON UNDER THREAT FROM RETAIL PIRATES? BANKS SET TO INVEST IN LEGACY SYSTEMS TO COMBAT CHALLENGER BANK THREAT In its annual review, Ama- zon marked this as the first time the company has mentioned the words ‘coun- terfeit’ and ‘pirated’ as major risk factors, despite continu- ally reassuring customers of its “zero tolerance” policy. Amazon recently warned in- vestors of one of the biggest problems facing its online marketplace – counterfeit products. According to Simon Baggs, CEO at Incopro, it’s a prob- lem that could get much worse as Amazon shifts more of its sales to third- party sellers. Third-party products currently account for 52% of all products sold on the site with this number expected to rise. This year, for the first time, Amazon has added a warn- ing about counterfeit prod- ucts to their earnings report. Counterfeits being sold on their platform is a problem that has been growing ex- ponentially year-on-year, with minimal tangible action taken to address the issue thus far. Under the ‘risk factors’ sec- tion of their report, Amazon stated: “We may also be unable to prevent sellers in our stores or through other stores from selling unlaw- ful, counterfeit, pirated, or stolen goods, selling goods in an unlawful or unethical manner, violating the pro- prietary rights of others, or otherwise violating our poli- cies.” Amazon isn’t alone, all on- line marketplaces have an issue, and many have been paying lip service for some time. A quick search online reveals articles about Ama- zon going back years dis- cussing the latest initiatives that they are putting in place to fight counterfeits. Yet the issue continues to grow, and this is largely down to not putting action behind their words and not putting comprehensive enough programmes in place to ad- equately protect their con- sumers. While it may be true of Ama- zon that they are unable to prevent illegitimate sellers, that does not mean that businesses must expose themselves to risk through lack of action. Every single one of these companies knows only too well that Amazon is used by many to sell knock-off items that are often dan- gerous and always of infe- rior quality. The consumer is confused and out of pocket. Businesses experience lost sales from fakes. Now the fake issue is becoming a major threat to Amazon itself. More than three-quarters (80%) of bankers believe challenger banks are an in- creased threat to their busi- ness, while almost one-third (30%) believe they will be the single most disruptive threat in 2019. The survey, commis- sioned by FinTech provider Fraedom, found that in re- sponse the challenger bank threat, bankers expect their organisations to invest heav- ily in updating legacy systems (44%) and new technology (26%) in 2019. “With challenger banks set- ting themselves apart by of- fering innovative technology platforms, commercial banks are now realising they must invest in key areas in order to counter this threat. This was also echoed by our sur- vey which found other disrup- tive influences in 2019 to be digitalisation (36%) and con- sumerisation of technology (36%)”, said Kyle Ferguson, CEO, Fraedom. This comes as almost half (46%) of respondents per- ceive legacy systems to be the biggest barriers to the growth of commercial banks, while 32% cite it’s the pres- sure to save money. With investing in new technol- ogy high on the agenda for commercial banks, the survey found that over half (53%) of respondents believe AI and Machine Learning will be the technologies to have the big- gest impact on commercial banking in 2019. “It is clear to see that challeng- er banks are a disruptive force within the sector. Through the use of innovative technology, these banks have plugged a gap left by established retail banks, and are acting as a stark warning to banks within the commercial space which remains open to similar dis- ruption”, added Ferguson. “If commercial banks are to com- pete, they must become more agile and adopt new technol- ogy platforms suited to chang- ing needs of businesses, or risk being left behind.”