JUNE 2023
Finance Monthly. Editor’s Note Dear Readers, Welcome to the latest edition of Finance Monthly Magazine! In this month’s issue, we are thrilled to present a collection of thought-provoking articles and insights that aim to expand your horizons and provide valuable knowledge in the ever-evolving world of finance. We kickstart our edition with a deep dive into the emerging concept of the metaverse and its potential for monetization in business. Explore how forward-thinking entrepreneurs are leveraging this virtual realm to achieve unparalleled success. Next, we delve into the revolutionizing landscape of consumer finance, uncovering the latest trends and innovations that are reshaping the way individuals interact with financial services. Stay informed and discover how cutting-edge technologies are empowering consumers like never before. Are economic terms leaving you perplexed? Fear not! Our experts have prepared a comprehensive guide to decoding economic jargon, making complex concepts accessible to all. Enhance your financial literacy and gain a better understanding of the economic forces that shape our world. In our exploration of economic ideologies, we take a closer look at trickle-down economics. Delve into the historical context, its impact on wealth distribution, and the ongoing debates surrounding this theory. We then shift our focus to the realm of due diligence, emphasizing the power of social media analytics in shaping public sentiment. Uncover why harnessing the insights from social media platforms is a crucial component of informed decision-making in the modern business landscape. The rise of remote work has transformed the traditional office setting. Our experts evaluate the impact of this paradigm shift on creativity and productivity, examining how businesses can adapt and thrive in the new workplace environment. For the savvy real estate investors among our readers, we present the top 10 cities worth considering for real estate investment. Uncover promising markets and make informed decisions in your pursuit of profitable ventures. Lastly, we address a pressing concern in today’s digital age - cybersecurity in the banking sector. Learn how technological advancements are bolstering defenses against cyber-attacks and fraud, safeguarding both institutions and customers. All this and much more besides in our June edition. We hope you find this edition of Finance Monthly Magazine insightful and enriching. As always, we strive to provide you with the latest trends, expert analysis, and practical advice to help you navigate the ever-changing landscape of finance. Mark Palmer Editor editor@finance-monthly.com Follow us on Instagram Financemonthly Find us on Facebook Finance Monthly Stay Connected www.linkedin.com/finance-monthly Tweet us @Finance_Monthly Copyright 2023 Published by Universal Media Ltd The views expressed in the articles within Finance Monthly are the contributors’ own, nothing within the announcements or articles should be construed as a profit forecast. All rights reserved. Material contained within this publication is not to be reproduced in whole or part without the prior permission of Finance Monthly. Circulation details can be found at www.finance-monthly.com Universal Media Ltd PO Box 17858, Tamworth, B77 9QG United Kingdom 0044 (0) 1543 255 537 Monthly Finance 3
Finance Monthly. Contents 4 CONTENTS THE MONTHLY ROUND-UP News You Can’t Afford to Miss 6. 14. FRONT COVER FEATURE BOLSTERING CYBERSECURITY IN THE BANKING SECTOR FINANCIAL INNOVATION & FINTECH Expanding the Wearable Payments Ecosystem: How One Company is Shaping the Future of Wearables Expanding Horizons: Monetizing the Metaverse for Business Success Revolutionizing Consumer Finance: The AI Perspective Why Tax Transformation Must Not be Left Behind in The FinTech Digital Revolution 20. 24. 28. ECONOMICS 101 Decoding Economic Terms Inflation, Stagflation and Deflation Trickle Down Economics Does it Work? 34. 38. The Role of Technology in Preventing Cyber Attacks and Fraud 30.
Finance Monthly. 5 Contents 24. 38. 20. Expanding the Wearable Payments Ecosystem BUSINESS & ECONOMY Public Sentiment Has Power: Why Social Media Analytics is an Essential Component of Due Diligence Redefining the Workplace Assessing the Impact of Remote Work on Creativity and Productivity Volatility is Now Business-as- Usual for Corporate Treasury, Here’s How to Thrive 44. 48. INVESTMENT Beyond the Stock Market: Alternative Investment Opportunities Top 10 Cities to Invest in Real Estate 56. 60. BANKING & FINANCIAL SERVICES An Interview with Chris Siraganian Financial Advisor at First Financial Consulting eCash: The Key to Online Financial Transactions for Cash Payers and Security Seekers 66. How One Company is Shaping the Future of Wearables Expanding Horizons: Monetizing the Metaverse for Business Success Trickle Down Economics Does it Work? Sirec Energy’s EuSIF Closing The Restructuring of Franco Colaiacovo Gold Streets Chartered Accountants Merges with Eadie Young Chartered Accountants Swann Systems Completes a Management Buyout 76. TRANSACTION REPORTS 78. 79. 80. 50. 70. Liz Truss Picture by: Simon Dawson
Finance Monthly. 6 THE MONTHLY ROUND-UP News You Can’t Afford to Miss The Monthly Round-Up CASH IS KING (AGAIN) Nearly half (46%) of Brits are using cash more now than they were 12 months ago, with cash usage rising more sharply among younger Britons ages 1834 in the last year (61% vs. 47% ages 45-54 and 33% ages 55+). According to a new study commissioned by smart money platform Credit Karma UK, the rising cost of living is prompting many to pay with physical money more often. Three in 10 Brits who are using cash more now compared to 12 months ago (30%) say it is because they need to be more mindful of their spending given the higher cost of living. Additionally, some are doing so because they want to avoid racking up debt (18%), while others are doing so to avoid accruing interest on purchases (11%) and banking fees (11%). Meanwhile, about 1 in 5 younger adults who use cash more now compared to 12 months ago (21%) are doing so because they have more control when they use cash. Many are also concerned about the impact that credit card use will have on their long-term financial standing, as one in five (19%) are using cash more now to protect their credit score. Social media trends could also be behind the recent cash boom. Nearly three quarters (70%) of younger Britons have at least heard of the social media financial trend of “cash stuffing’’, which is setting aside physical cash for different spending categories at the beginning of each month. However increased dependence on cash doesn’t come without its challenges. Over 300 more high street bank closures are expected throughout 2023, which could make accessibility even more of an issue.1 And, in some cases, dependence on physical money can lead to disassociation with spending. A third (32%) of younger adults who use cash more now compared to 12 months ago claim it is because paying with cash feels like free money as there is no digital trace of the transaction, which can make budgeting for fixed monthly expenses more difficult in the long run Younger Britons use more physical currency now compared to 12 months ago
Finance Monthly. 7 The Monthly Round-Up THE MPC SETS THE BAR HIGH FOR FURTHER RATE HIKES The Bank of England’s Monetary Policy Committee voted 7-2 to raise Bank Rate by 25bps to 4.5% at the May meeting today. The increase was in line with both our forecast and market expectations. The minutes effectively left the criteria for additional rate hikes unchanged, requiring evidence of more persistent inflationary pressures to justify tightening again. But at the same time, the BoE adopted a stronger forecast for GDP and a lower projection for unemployment. And though it lowered its near-term inflation profile a little, it remains much higher than our forecast (Chart 1). Indeed, if we are right, the Q2 figures will represent the largest one-quarter ahead undershoot of the BoE’s forecast in history. What’s more, the consensus forecast for inflation in Q2 is even lower than our own. Therefore, the scope for key data to surprise to the upside of the MPC’s forecast looks quite limited. So, if the MPC remains consistent with its guidance, then 4.5% should represent the peak for Bank Rate. While the MPC’s message about the near-term outlook for rates appeared dovish, its forecasts suggest rate cuts are likely some way off. The BoE brought its 2023 growth forecast into line with our own (Chart 2), while it now expects unemployment to remain close to current levels rather than rising significantly, implying that the labour market will remain tight. The MPC has become slightly less pessimistic about the outlook for supply, as it has adopted a new set of ONS population assumptions and factored in the impact of Budget reforms aimed at increasing participation. Together, these changes have raised its estimate of the level of potential supply by just over 1ppt in three years’ time. But this still represents a weaker forecast than our own, and it is much softer than the OBR’s projection. So while the BoE’s higher inflation forecast for H2 2023 is a function of higher food prices, its higher inflation projections further out reflect stronger demand combined with the MPC’s rather pessimistic take on supply, meaning that a much smaller degree of spare capacity is expected to emerge. The MPC also repeated its line from February that the risks to the inflation outlook are heavily skewed to the upside, reflecting the possibility that second-round effects on wages and prices might take longer to unwind. Given the risk profile and that the MPC maintains a rather pessimistic view on supply, it’s hard to see the majority swinging towards active consideration of rate cuts anytime soon. For the MPC to get to that stage, it will need to see inflation fall much lower, wage growth falling back significantly, and evidence that labour market conditions have loosened sufficiently. We think such signals are unlikely to emerge until at least early-2024, with the risks skewed towards rates remaining on hold for longer. Finally, the minutes revealed that the unwind of the BoE’s corporate bond purchases was well ahead of schedule. Only £2.7bn of the original £20bn stock of purchases are still held by the BoE and, apart from a small number of very short maturity bonds, the remaining bonds will be sold in the next few weeks. This will mean the unwind is completed well ahead of the longstanding deadline of end-2023.
8 Finance Monthly. The Monthly Round-Up NEW CONFLUENT FEATURES MAKE IT EASIER AND FASTER TO CONNECT, PROCESS, AND SHARE TRUSTED DATA, EVERYWHERE Confluent, Inc. (NASDAQ: CFLT), the data streaming pioneer, today announced new Confluent Cloud capabilities that give customers confidence that their data is trustworthy and can be easily processed and securely shared. With Data Quality Rules, an expansion of the Stream Governance suite, organizations can easily resolve data quality issues so data can be relied on for making business-critical decisions. In addition, Confluent’s new Custom Connectors, Stream Sharing, the Kora Engine, and early access program for managed Apache Flink make it easier for companies to gain insights from their data on one platform, reducing operational burdens and ensuring industry-leading performance. Having high-quality data that can be quickly shared between teams, customers, and partners helps businesses make decisions faster. However, this is a challenge many companies face when dealing with highly distributed open-source infrastructure like Apache Kafka. According to Confluent’s new 2023 Data Streaming Report, 72% of IT leaders cite the inconsistent use of integration methods and standards as a challenge or major hurdle to their data streaming infrastructure. Today’s announcement addresses these challenges with the following capabilities: Data Quality Rules bolsters Confluent’s Stream Governance suite to further ensure trustworthy data Data contracts are formal
9 Finance Monthly. The Monthly Round-Up agreements between upstream and downstream components around the structure and semantics of data that is in motion. One critical component of enforcing data contracts is rules or policies that ensure data streams are high-quality, fit for consumption, and resilient to schema evolution over time. To address the need for more comprehensive data contracts, Confluent’s Data Quality Rules, a new feature in Stream Governance, enable organizations to deliver trusted, high-quality data streams across the organization using customizable rules that ensure data integrity and compatibility. With Data Quality Rules, schemas stored in Schema Registry can now be augmented with several types of rules so teams can: • Ensure high data integrity by validating and constraining the values of individual fields within a data stream. • Quickly resolve data quality issues with customizable follow-up actions on incompatible messages. • Simplify schema evolution using migration rules to transform messages from one data format to another. Custom Connectors enable any Kafka connector to run on Confluent Cloud without infrastructure management Many organizations have unique data architectures and need to build their own connectors to integrate their homegrown data systems and custom applications to Apache Kafka. However, these custom-built connectors then need to be self-managed, requiring manual provisioning, upgrading, and monitoring, taking away valuable time and resources from other business-critical activities. By expanding Confluent’s Connector ecosystem, Custom Connectors allow teams to: • Quickly connect to any data system using the team’s own Kafka Connect plugins without code changes. • Ensure high availability and performance using logs and metrics to monitor the health of team’s connectors and workers. • Eliminate the operational burden of provisioning and perpetually managing low-level connector infrastructure. Confluent’s new Custom Connectors are available on AWS in select regions. Support for additional regions and other cloud providers will be available in the future. Stream Sharing facilitates easy data sharing with enterprise-grade security No organization exists in isolation. For businesses doing activities such as inventory management, deliveries, and financial trading, they need to constantly exchange real-time data internally and externally across their ecosystem to make informed decisions, build seamless customer experiences, and improve operations. Today, many organizations still rely on flat file transmissions or polling APIs for data exchange, resulting in data delays, security risks, and extra integration complexities. Confluent’s Stream Sharing provides the easiest and safest alternative to share streaming data across organizations. Using Stream Sharing, teams can: • Easily exchange real-time data without delays directly from Confluent to any Kafka client. • Safely share and protect your data with robust authenticated sharing, access management, and layered encryption controls. • Trust the quality and compatibility of shared data by enforcing consistent schemas across users, teams, and organizations. Additional innovations to be announced at Kafka Summit London: Organized by Confluent, Kafka Summit London is the premier event for developers, architects, data engineers, DevOps professionals, and those looking to learn more about streaming data and Apache Kafka. This event focuses on best practices, how to build next-generation systems, and what the future of streaming technologies will be. Other new innovations in Confluent’s leading data streaming platform include: • Kora powers Confluent Cloud to deliver faster insights and experiences: Since 2018, Confluent has spent over 5 million engineering hours to deliver Kora, an Apache Kafka engine built for the cloud. With its multi-tenancy and serverless abstraction, decoupled networking-storage-compute layers, automated operations, and global availability, Kora enables Confluent Cloud customers to scale 30x faster, store data with no retention limits, protect them with a 99.99% SLA, and power workloads with ultra-low latency. • Confluent’s Apache Flink early access program previews advanced stream processing capabilities: Stream processing plays a critical role in data streaming infrastructure by filtering, joining, and aggregating data in real time, enabling downstream applications and systems to deliver instant insights. Customers are turning to Flink to handle large-scale, high throughput, and low latency data streams with its advanced stream processing capabilities and robust developer communities. Following Confluent’s Immerok acquisition, the early access program for managed Apache Flink has opened to select Confluent Cloud customers to try the service and help shape the roadmap by partnering with the company’s product and engineering teams.
10 Finance Monthly. The Monthly Round-Up BURBERRY GROWTH ACCELERATES IN THE FOURTH QUARTER Burberry, the British luxury fashion house, has released its full year results: • Like-for-like sales in store increased 7% for the year, with growth accelerating to 16% in Q4 as sales in Mainland China recovered. • Adjusted operating profit rose by 21%, boosted by currency movements. Excluding currency moves, profit rose by 8%. • Near and medium-term targets unchanged - targeting high-single digit revenue growth and rising margins. Charlie Huggins, Manager of the Quality Shares Portfolio at Wealth Club, commented: “Burberry’s sales growth accelerated in the fourth quarter, as pandemic restrictions in China eased, leading to a solid set of full year results. Looking to the medium to longer term, Burberry’s success will hinge on the success of new chief executive, Jonathan Akeroyd’s strategy to turn around the struggling luxury fashion house. This will take some time to judge, but the early signs are encouraging, with a good response to Burberry’s new brand designs and margins finally moving in the right direction. The group’s performance has been disappointing for many years. Growth and margins have significantly lagged that of European rivals, and operational execution has often left a lot to be desired. Given this track record, it is far too early for the new CEO to declare victory and much work still remains to be done. Sales in the Americas for example declined by 7% in the fourth quarter, a much weaker performance than Burberry’s key European rivals. It’s not going to be a quick or easy fix. Elevating a luxury brand like Burberry and creating new products that resonate with consumers takes time, and there are no silver bullets. But at least sales and margins are moving in the right direction, providing early encouragement.”
11 Finance Monthly. The Monthly Round-Up UK-based Deployed today announced it has raised $4M in a seed funding round co-led by Amrock Ventures and M12 Microsoft Ventures, with participation from Portfolio Ventures, Mayfield Fund, HERmesa, and Angel Academe. Launched in 2020 by Emma Rees (CEO), Kayleigh Kuptz (COO) and Jamie Gannaway (CPO) with two government grants, Deployed is the only scoping platform that makes it simple to write, edit, and publish Statements of Work. While trillions of dollars are spent on contractually scoped projects every year, 65% of projects fail to meet original objectives and 1 in 10 end in legal or payment disputes. Deployed’s goal is to make projects clearer and more successful by reinventing the copy pasted patchwork of email, Word and Excel processes involved in writing, agreeing, and signing contracted work. Deployed offers a single platform where requestors of services, procurement, legal and compliance teams can navigate and collaborate on the request to signature workflow via an easy-to-use editor interface. This means that C-suite leaders, who have watched their project portfolio costs inflate by 20% since Covid, yet consistently miss the time, budget or quality metrics promised at the start of projects, can now understand the benefits their projects deliver, and 10x their success by solving poor project definition up front. In 2020, the company won the global Melinda Gates Female Founders award for enterprise technology. Deployed will use its latest round of funding to further feature development, apply assisted writing and generative AI, and expand new and existing enterprise clients and boost hires. The company currently works with large enterprise clients including Randstad Sourceright, Talent Solutions TAPFIN and Roche. DEPLOYED RAISES $4M TO REDEFINE HOW STATEMENTS OF WORK ARE CREATED AND PROJECTS ARE PLANNED Female founded Enterprise Tech startup raises funding to rewrite the language of work New figures released by HRMC today show a 39% year-on-year increase in EIS funding in 2021/22, with total investment through the scheme reaching £2.3 billion – the highest since the scheme began. The scheme, which brings together private investors with companies that need funds to scale up operations, supported 4,480 companies in the year, a 19% increase on 2020/21. Money invested through the Seed Enterprise Investment Scheme (SEIS), which invests in earlier stage start-ups, rose 16%, increasing to a record £205 million, spread across 2,270 companies (another record). Of these, 80% were raising money for the first time and companies registered in London and the Southeast accounted for 67% of all the SEIS investment. Since the Enterprise Investment Scheme launched in 1994, 36,145 individual companies have received investment and around £27.9 billion of funds have been raised in total. Whereas, 17,335 companies have raised £1.7 billion under SEIS since its launch in 2012/13. The number of investors claiming EIS relief rose 15.7% to 45,155, while 9,950 investors claimed SEIS relief, up 4.8%. Across both EIS and SEIS, over half of investors invested less than £10,000. NEW HMRC FIGURES SHOW EIS INVESTMENT GREW 39% IN 2021/22 while SEIS also hits all-time high, with 16% growth
12 Finance Monthly. The Monthly Round-Up SELF-EMPLOYED PENSION CRISIS FEARS RENEWED AS RESEARCH SUGGESTS 45% AREN’T SAVING New research suggesting that 45% of freelancers are not saving into a pension has prompted renewed calls for political parties to tackle the issue in their manifestos ahead of the next election. The findings, released today by IPSE (the Association of Independent Professionals and the Self-Employed) and financial planning consultants CMME Contractor Wealth, are the latest sign of a worsening outlook for the retirement plans of the self-employed. The research revealed that 15% of freelancers don’t currently have a private or personal pension, whilst 30% indicated that despite having a pension, they are not currently paying into it. The top reasons reported by the self-employed for not currently saving into a pension included having other financial priorities (34%), affordability (24%) and ceasing contributions to a pension after becoming self-employed (24%). This follows research published by IPSE and CMME Contractor Wealth in 2021, which found that 14% of self-employed professionals were not saving for later life in any way. Unlike employees, the self-employed do not benefit from automatic enrolment into a workplace pension or from additional contributions by an employer. As digital payments continue to grow in popularity, the threat of fraudulent activity also rises. With UK Finance revealing that people in the UK lost £1.2bn to fraud in 2022, the equivalent of £2,300 every minute, it’s clear that there’s a pressing need for payment providers to take action to protect their customers. The report also stated that nearly 80% of APP fraud cases started online and 18% started via telecommunications, further emphasising the need for action. At allpay, we’re committed to tackling and solving payments fraud, and we’re proud to say that our approach has been highly effective. Out of the 8,581,305 transactions made in the last year on our prepaid cards, only 0.0058% of these were fraudulent. Our fraud detection and prevention systems have enabled us to keep our customers safe, and our continued investment in cutting-edge technology means that we’re always one step ahead. allpay has a robust fraud system in place, which utilises a number of alerts to identify suspicious or fraudulent activity; these alerts are then reviewed and monitored by allpay’s experienced Compliance Team. allpay are constantly ensuring adherence with new regulations, making sure that our systems for combatting fraud are always improving in order to keep our fraud rate as low as possible. One of the keys to allpay’s success has been our focus on collaboration. We work closely with industry bodies, law enforcement agencies, and other payment providers to share intelligence and insights about the latest fraud threats. This collaborative approach allows us to stay informed about emerging risks and take proactive steps to protect our customers. We also invest heavily in training and development for our staff, ensuring that they’re equipped with the skills and knowledge needed to identify and respond to potential fraud attempts. Our teams are highly trained in the latest fraud prevention techniques and are constantly updating their knowledge to stay ahead of the game. Overall, the UK Finance Annual Fraud Report highlights the need for financial institutions to remain vigilant in their efforts to tackle fraud and to continue to invest in the latest technology and consumer education to protect their customers. allpay Limited is committed to this goal and will continue to work tirelessly to prevent fraud and safeguard its customers’ financial wellbeing. PROTECTING YOUR DIGITAL PAYMENTS: How allpay is Fighting Fraud
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Banking & Financial Services 14 Finance Monthly.
BOLSTERING CYBERSECURITY IN THE BANKING SECTOR The Role of Technology in Preventing Cyber Attacks and Fraud In an era of digital transformation, the banking sector stands at the forefront of rapid innovation, presenting new opportunities and fresh challenges. Among these challenges, cybersecurity emerges as a paramount concern. The rising tide of cybercrime, marked by sophisticated attacks and unprecedented levels of fraud, is a significant threat to financial institutions and their customers. This comprehensive examination in Finance Monthly explores the crucial role of technology in enhancing cybersecurity in the banking sector. It sheds light on how financial institutions can fortify their defenses, prevent cyber-attacks, and protect customers from fraud, leveraging the power of advanced technologies. Despite the escalating threats, the intersection of banking and technology can serve as a formidable bastion against cybercriminals when strategically managed and intelligently implemented. Finance Monthly. Banking & Financial Services 15
In the digital age, the banking sector is confronted with a wide array of cyber threats, ranging from sophisticated hacking attempts and distributed denial-of-service (DDoS) attacks to insidious phishing schemes and even internal security breaches. The increasing prevalence of online and mobile banking applications has created an environment of heightened risk, making both financial institutions and their customers’ targets for malicious cyber actors intent on exploiting vulnerabilities for financial gain. However, as daunting as these challenges may appear, they are not insurmountable. Advanced technological tools and solutions are available that can help banks stay one step ahead of cybercriminals, ensuring the security of sensitive financial data and protecting the public from falling victim to fraudulent activities. Artificial Intelligence (AI) and Machine Learning (ML) have emerged as powerful tools in the fight against cyber threats. These technologies can analyze vast amounts of data in real time, identifying unusual patterns or suspicious activity that may suggest an ongoing cyber attack or fraudulent transaction. This early detection capability enables banks to respond rapidly and effectively to potential threats, thereby minimizing damage. Behavioural biometrics is another cutting-edge technology that banks are beginning to leverage for enhanced security. This innovative approach involves analyzing the unique ways individuals interact with their devices, such as their typing speed, mouse movements, and touchscreen usage patterns. These behavioural patterns can serve as reliable identifiers, making it easier to detect and thwart unauthorized access attempts to customer accounts. Data encryption and tokenization also play critical roles in safeguarding sensitive information. Through end-to-end encryption, banks can ensure that data remains secure and unreadable even if intercepted during transmission. Tokenization, on the other hand, replaces sensitive data elements, such as credit card numbers, with non-sensitive equivalents or tokens, thereby securing financial transactions and reducing the risk of data breaches. “(AI) and Machine Learning (ML) have emerged as powerful tools in the fight against cyber threats.” Banking & Financial Services 16 Finance Monthly.
Furthermore, as banks increasingly adopt cloud computing solutions for their cost-effectiveness and scalability, it becomes crucial to deploy robust cloud security tools to protect sensitive data, maintain privacy, and ensure regulatory compliance. Multi-factor authentication (MFA) adds another layer of security by requiring users to provide two or more verification factors to gain access to their accounts. This significantly reduces the chances of successful fraud or data breaches, as it would require a cybercriminal to bypass multiple security barriers to gain unauthorized access. While these technological solutions offer robust defenses against cyber threats, it is also imperative for banks to recognize the importance of human elements in maintaining cybersecurity. Human error often plays a significant role in successful cyber-attacks and instances of fraud. To address this issue, banks must prioritize the education of their customers and employees about potential cyber threats and the best practices for digital security. For instance, banks can guide customers on creating strong passwords, recognizing phishing attempts, and using secure networks for online banking. Employees, on the other hand, should receive regular training on handling sensitive data securely and staying abreast of the latest cyber threats. Compliance with industry regulations and standards, such as the Payment Card Industry Data Security Standard (PCI DSS), is another important aspect of a comprehensive cybersecurity strategy. These frameworks provide valuable guidelines for protecting customer data and can inform the implementation of various security technologies. In addition to individual efforts, the banking sector should also explore opportunities for collaboration. By working closely with each other and with government agencies, banks can share intelligence about emerging threats and effective defense strategies, thereby strengthening the collective security of the financial sector. In conclusion, while the digital revolution has introduced new vulnerabilities in the banking sector, it has also provided a wealth of technological tools to defend against cyber threats and fraud. By effectively harnessing these tools, providing thorough training to customers and employees, and fostering collaboration within the industry, banks can secure their operations and protect the public. The initial investment in such defenses is significantly outweighed by the potential financial and reputational costs of a successful cyber attack or instance of fraud. A secure banking sector is not just beneficial for individual banks or their customers; it is also critical for the stability and integrity of the global economy. “Human error often plays a significant role in successful cyberattacks and instances of fraud.” Finance Monthly. Banking & Financial Services 17
FinTech Awards2023 FM WINNERS EDITION COMING SOON Click here or visit www.finance-monthly.com for more information Year upon year, the Finance Monthly FinTech Awards recognise the true innovators who help drive the FinTech industry forward and help make the sector what it is today. Monthly Finance
Innovation 20. 24. Financial FinTech Expanding the Wearable Payments Ecosystem: How One Company is Shaping the Future of Wearables Expanding Horizons: Monetizing the Metaverse for Business Success Revolutionizing Consumer Finance: The AI Perspective Why Tax Transformation Must Not Be Left Behind In the Fintech Digital Revolution 28. 30.
Financial Innovation & FinTech 20 Finance Monthly.
The wearable technology market is rapidly expanding - when walking down the street; it feels like everyone has a smart watch or ring tracking their health, sleep, exercise, and even “energy levels.” But one specific type of wearable is gaining traction: payments. Payment-enabled wristbands, rings, and watches are seeing growing popularity as convenient alternatives to traditional payment methods. However, the technology available for wearables today requires each manufacturer to integrate directly with each and every bank/issuer in the market. Sometimes we’re talking about 1000’s of banks in each market. That creates an impossible mission for innovative wearables manufacturers to offer a credible ‘pay’ capability. At Curve, we recognized the potential of these passive wearables and saw an opportunity to leverage our wallet functionality to revolutionise the payment experience and help manufacturers get to 100% bank coverage. Curve’s wallet functionality also allows customers to attach multiple existing credit and debit cards to the Curve app, and charge those cards through the single Curve card. This “multiple cards in one” functionality makes Curve uniquely positioned to take on the passive wearables market – whereas previously, people could only connect one single card to their smart ring or watch, now they can connect all their cards. EXPANDING THE WEARABLE PAYMENTS ECOSYSTEM: How One Company is Shaping the Future of Wearables By Shachar Bialick, CEO of Curve Finance Monthly. Financial Innovation & FinTech 21
It could have been a risky move, entering an entirely new market – wearables – when we were previously so focused on our original project. Expanding our horizons and jumping headfirst into a new opportunity it’s paid off tremendously. Over the last two years, Curve has focused on forging strong partnerships with leading wearable companies, including Swatch, Garmin, Samsung, Wearonize, Fidesmo, Tappy, Xiaomi, and Digiseq. These collaborations have allowed us to seamlessly integrate our gamechanging technology that enables multiple cards to be connected to a single wearable device, a feat that was previously impossible with passive wearables. By doing so, we’re creating a unified payment experience that supports a wide range of payment wristbands, rings, and watches. Our strategic partnerships have significantly expanded the wearable payments ecosystem. These collaborations have enabled partners to offer an array of customizable wearable options, catering to a diverse range of preferences and styles. While smart devices are bound by the need for software, charging, and screens for interaction, passive wearables can take on almost any form. This flexibility allows manufacturers to really let their “BY COMBINING OUR PAYMENT TECHNOLOGY WITH THE DESIGN EXPERTISE OF FASHION BRANDS, WE AIM TO CREATE A NEW BREED OF FASHIONABLE AND FUNCTIONAL WEARABLES.” Financial Innovation & FinTech 22 Finance Monthly.
creativity flow. Innovators in the space have pushed creative boundaries to enable everything from shirts to jewellery to accept payments. The success of these partnerships is evident in the numbers - wearable customers who attach Curve are more engaged and exhibit higher retention. Curve is actively exploring ways to support our passive wearable partners in targeting large, traditional fashion brands. Many fashion brands have signature aesthetics that customers use to identify a brand. Through Curve’s successful partnership with Swatch, we’ve proven demand for payments-enabled traditional watches. By combining our payment technology with the design expertise of fashion brands, we aim to create a new breed of fashionable and functional wearables. This strategy will not only broaden the appeal of wearable payment devices but also help our partners tap into new market segments. In addition to our efforts in the passive wearables space, Curve is exploring opportunities with a number of smartwatch brands. By collaborating with these companies, we can bring the benefits of Curve’s wallet functionality to a wider range of devices, enhancing the payment experience for smartwatch users as well, without much investment required from the smartwatch brand. Breaking into the passive wearable industry was a marked departure from our traditional channels and serves as a prime example of how it’s worth taking a chance to explore non-traditional customers. As we continue to push the boundaries of innovation, our vision for the future of payments extends beyond just wearables. We no doubt will enter new, currently unconsidered categories. We are committed to raising the bar of customer experience while guiding customers on their journey to financial freedom. Forging strong partnerships with leading wearable companies is a significant contributor to making this vision a reality. By exploring different market segments, embracing new form factors, and targeting untapped opportunities, Curve can confidently shape the future of finance for the better and serve as a model for others to follow. *Disclaimer: All images are for illustration purposes only Finance Monthly. Financial Innovation & FinTech 23
Financial Innovation & FinTech 24 Finance Monthly. EXPANDING HORIZONS: Monetizing the Metaverse for Business Success The term “metaverse” has captured the attention of the global tech community. Considered as the next phase of the internet, the metaverse is a virtual reality space where users can interact with each other and the digital environment in real-time. This burgeoning frontier opens up a wealth of opportunities for businesses to generate revenue. Here, we delve into how businesses can monetize the metaverse.
Finance Monthly. Financial Innovation & FinTech 25 VIRTUAL REAL ESTATE The New Frontier In the metaverse, virtual real estate is turning into a lucrative investment opportunity. Companies and individuals are investing in digital plots, where they can host events, advertise products or services, or even resell at a profit as the metaverse grows. Notably, businesses can create branded spaces, allowing customers to experience their offerings in an immersive, interactive manner. DIGITAL GOODS AND SERVICES Just like in the real world, goods and services are integral to the metaverse. Businesses can sell virtual clothing, furniture, and other digital assets that users can use to customize their avatars or virtual spaces. These goods, often underpinned by blockchain technology and NFTs, have real value and can be bought, sold, or traded. Moreover, services like virtual reality concerts, educational courses, and professional consultations can be monetized. Imagine attending a cooking class by a celebrity chef or a concert by a popular musician, all from the comfort of your own home via an avatar in the metaverse.
ADVERTISING AND SPONSORSHIPS The metaverse provides businesses with a whole new world of advertising opportunities. Companies can create immersive and interactive ads within the virtual environment, reaching audiences in innovative ways. Sponsorships of virtual events and locations also present a significant revenue stream. SUBSCRIPTION MODELS Just as we have seen with many digital platforms, subscription models could be applied in the metaverse as well. Users might pay a monthly fee for premium features or access to exclusive areas. Businesses could also employ a freemium model, where basic access is free, but additional features, benefits, or virtual goods require payment. Financial Innovation & FinTech 26 Finance Monthly.
DATA ANALYSIS AND CONSULTING Understanding user behavior in the metaverse will be key to success. Businesses can provide consulting services or data analytics to other companies looking to stake their claim in the virtual world. This could include anything from analyzing hotspots for virtual billboards to understanding how consumers interact with different types of digital products. CONCLUSION Embracing the Virtual Age Navigating the uncharted terrain of the metaverse might seem daunting, but it also presents an exciting array of opportunities. As this new digital economy continues to develop and evolve, businesses that embrace the potential of the metaverse stand to reap substantial rewards. However, it’s essential to tread carefully. Regulatory frameworks, user privacy, and cybersecurity are all significant considerations as we move towards this new reality. But, with careful planning and innovative thinking, businesses can harness the metaverse to drive growth, engage with customers in novel ways, and open new revenue streams. Finance Monthly. Financial Innovation & FinTech 27
REVOLUTIONIZING CONSUMER FINANCE: The AI Perspective The rapidly evolving field of artificial intelligence (AI) is significantly altering various sectors of our economy, with consumer finance being no exception. From predictive analytics to personalized customer service, AI has quickly grown to become a crucial component of the modern finance industry. Financial Innovation & FinTech 28 Finance Monthly.
Seamless Customer Service with Chatbots AI chatbots, like OpenAI’s GPT4, have been instrumental in transforming customer service within the consumer finance sector. These AI-driven tools can handle thousands of customer queries simultaneously, provide instant responses, and operate round-the-clock, resulting in reduced wait times and improved customer satisfaction. Furthermore, advanced natural language processing abilities allow these bots to understand complex queries and provide appropriate responses. This enhanced automation frees up human customer service representatives to address more complex issues, improving overall efficiency. Risk Assessment and Fraud Detection AI has proven invaluable in detecting fraud, assessing creditworthiness, and managing risk. Machine learning algorithms can analyze vast amounts of data to identify patterns, trends, and anomalies that may indicate fraudulent activities. In terms of credit risk assessment, AI uses predictive analytics to help financial institutions make more accurate determinations. By analyzing an individual’s spending habits, payment history, and other relevant data, AI systems can provide a comprehensive credit risk score that far surpasses the traditional credit checks in accuracy and fairness. Personalized Financial Advice Personalized financial advice, once exclusive to wealthy individuals, is now accessible to the masses thanks to AI-powered roboadvisors. These platforms use AI algorithms to create personalized investment strategies based on individual goals, risk tolerance, and time horizons. They can rebalance portfolios, identify tax-efficient strategies, and adjust plans as users’ financial situations change. Automating Manual Processes The implementation of AI technology has also streamlined numerous manual processes in the finance industry. Tasks such as document verification, data entry, and compliance checks, which previously required considerable time and human resources, are now handled swiftly and accurately by AI, greatly improving operational efficiency. RegTech and Compliance Regulatory technology (RegTech) uses AI to help businesses comply with regulations more efficiently. It can track changes in regulations, ensure compliance in real-time, and flag potential issues. This is particularly relevant in consumer finance, where regulations can be complex and the cost of noncompliance is high. Looking Ahead While the transformation AI brings to consumer finance is significant, it’s important to remember that AI is only as good as the data it’s trained on. Issues of data privacy, fairness, and transparency need to be addressed as AI becomes increasingly integrated into our financial systems. Furthermore, the workforce will need to adapt to the changes brought on by AI. Employees will need to develop new skills as their roles shift and change due to AI implementation. The potential of AI in consumer finance is vast and largely untapped. As we move forward, it is essential to navigate the challenges and harness the power of AI responsibly to create a more efficient, inclusive, and resilient consumer finance sector. Finance Monthly. Financial Innovation & FinTech 29
30 Finance Monthly. Financial Innovation & FinTech WHY TAX TRANSFORMATION MUST NOT BE LEFT BEHIND IN THE FINTECH DIGITAL REVOLUTION
Finance Monthly. 31 Financial Innovation & FinTech In reality, this is not surprising. As a constituent part of the overall finance function, tax may not be viewed as a priority area when organisations come to implement digital transformation projects. Moreover, tax is ultimately driven by compliance, so the effects of any changes implemented here are felt much less widely than those in other key areas of finance – which are more likely to have a significant impact across the business. As a result, the percentage of the overall finance budget dedicated to digital tax projects typically pales in comparison to other finance functions. Think of it this way: in getting Environmental, Social, and Governance (ESG) planning and implementation initiatives off the ground, for instance, businesses tend to do the bare minimum until regulations or other pressures force more urgent change. The same idea can be applied to allocating time and resources to tax transformation. What’s more, the unique needs of each business, its position in the finance and tax lifecycle and the proficiency of the finance team play important roles in the budget allocation relating to digital transformation projects. In this context, and with many CFOs coming from an accountancy rather than a tax background, it’s simply more likely that they will focus on areas more aligned with their roles and experiences. Untapped Potential And herein lies a growing problem and an important opportunity for positive change. By overlooking tax transformation, many businesses are missing out on valuable insights and efficiencies. Often seen as a compliance box-ticking exercise, businesses do what’s needed to remain tax efficient and compliant. Yet, beyond these core objectives, tax transformation holds immense potential. In practical terms, what does this mean? Implementing tax transformation is all about enabling tax professionals to focus on their areas of expertise: evaluating tax positions and maximising efficiency, while automation assumes the role of handling repetitive tasks. While this could be unsettling for some, the objective is to use advanced tech tools to boost efficiency and productivity. It’s certainly not – as some people fear – about using AI to replace jobs, and for those people at the sharp end, tax transformation frees them to do the jobs that fit their expertise, not the jobs that automation can replace. In this situation, tax professionals are empowered to focus on more value-add tasks that can make a material impact on business performance. These are crucial considerations given that the general direction of travel is clearly in favour of greater digitalisation of the tax function at all levels. This includes HMRC, which is gradually integrating technology more deeply into its capabilities and processes. As they work towards building a “trusted, modern tax administration system,” changes they bring forward will inevitably be reflected in the way organisations interact with them. Ultimately, using technology to deliver tax transformation can undoubtedly contribute positively to a company’s cash flow and overall financial strategy. Organisations can only reap these benefits, however, if they adopt a mindset which sees the tax function as being driven by more than just regulatory compliance. By viewing it as an integral part of a wider digital transformation strategy, it becomes possible to leverage the capabilities of both tax professionals and emerging technologies for maximum impact. In the future, those organisations that give tax transformation the investment and strategic insight it requires will be ideally placed to deliver on the capabilities and efficiencies that have become synonymous with the digital age. By Bruce Martin, CEO at Tax Systems Across the dynamic fintech landscape, digital transformation has been widely embraced to deliver improvements and efficiencies across a host of key processes. Yet, within this important movement, a key aspect of finance – tax – can often be neglected, with many organisations missing significant opportunities to boost effectiveness as a result.
Decoding Economic Terms Inflation, Stagflation and Deflation Trickle Down Economics Does it Work? 34. 38. Economics 101
Economics 101 34 Finance Monthly.
Finance Monthly. Economics 101 35 For those who aren’t economists or finance professionals, terms like inflation, stagflation, and deflation can seem a bit confusing. However, they are key concepts that affect our daily lives and the broader economy. This article will demystify these economic terms and help you understand their implications. DECODING ECONOMIC TERMS Inflation, Stagflation, and Deflation
36 Finance Monthly. Economics 101 INFLATION: The Rising Tide Inflation is an economic term that refers to a general increase in prices and a corresponding decrease in the purchasing power of money. It means that over time, a dollar (or any other currency) gradually buys less and less. To illustrate, let’s say a movie ticket costs $10 today. With an annual inflation rate of 2% (a typical target for many central banks), the same ticket would cost $10.20 next year, $10.40 the year after, and so forth. Moderate inflation is usually seen as a sign of a healthy economy: it tends to indicate that consumers are spending, businesses are investing, and the economy is growing. However, if inflation gets too high, it can erode purchasing power and make life more expensive, which is especially problematic for those on fixed incomes. DEFLATION: The Downward Spiral Deflation is the opposite of inflation - it’s when prices decrease over time. While this might sound like a good thing (after all, who wouldn’t want things to be cheaper?), sustained deflation can be harmful to the economy. Here’s why: if consumers expect prices to fall, they might delay their purchases, which can reduce overall demand. This reduced demand can cause businesses to cut back production, leading to layoffs and further decreasing demand. It’s a vicious cycle that can lead to a long period of economic decline. Furthermore, deflation increases the real value of debt. If prices and incomes are falling, it becomes harder for people and businesses to repay their loans, which can lead to defaults and financial instability.
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