Finance Monthly caught up with Alex Corral, the Co-Founder and Chief Executive Officer of preCharge Risk Management Solutions. Founded in 2003, preCharge has since protected thousands of the world’s largest merchants, including Sony Entertainment, Footlocker, BassPro and many other brand name clients. Below Alex tells us more about it.

Tell us a bit about the technology and solution that PreCharge offers.

Since our inception, our technology has protected merchants. If you purchased from a major brand name online, there is a good chance that preCharge reviewed the order. Our goal was always to make identity validation seamless and in most cases, the millions of people we monitored never even knew. For over a decade, we worked with merchants to understand their tools, their needs and their technologies, and those merchants supplied us with their internal processes, as well as with millions upon millions of consumers, which lead to the creation of one of the most advanced identity verification tools online. While merchant service is a fickle industry, and merchants often change providers every 18 months, our average merchant was on board for upwards of five to ten years. Our goal was simple - verify the consumer without the need for them to contend with sending in their ID, calling for verification and jumping through hoops. We are now taking that same technology and offering it freely to consumers in an open-source, stable, audited and compliant solution. Our goal is to offer consumers a way of transacting with each other and not having to worry about whether who they are talking to is legitimate. We do this by offering everyone a free preCharge Wallet, which unlike traditional digital currencies, is centered around a person’s email address. From there, we validate the consumer, and in 99% of the cases, the consumer doesn't even need to send in their ID or other personal information because we are able to use the various data points to track who they really are. In the rare 1%, we will simply ask for some verification through our third-party companies, but preCharge will never see your information. Once a person has a wallet, they can basically ping other users with our utility token; think digital currency. An advantage is that while the wallet does have a unique alphanumeric code like traditional tokens, the core is an email address, so anyone with an email address can either send tokens to another user or simply use the service to validate their identity. We are rolling out an oAuth technology that will allow merchants to freely use the service, validate consumers or even transact business, essentially taking what merchants paid millions of dollars for year after year and giving it away for free. Our feeling is that our merchants help build this network, the consumers are the network; why not give it back to them for free?

What makes PreCharge’s solutions unique? 

While there are literally thousands of token options out there, no other is as heavily focused on compliance, auditing and openness as preCharge is. When it comes down to it, someone will become the leader in the token arena, why shouldn’t it be a company that has been building the technology for over a decade? We were helping create tokens even before it was a thing in 2006, with Sony Entertainment and Galanet, and worked with them for years on their in-house game tokens. My guess is that when you consider our history, our partners and our resources, preCharge will become the leading transactional token on the market.

PreCharge has been helping merchants and consumers all over the world before people knew anything about cryptocurrencies - can you tell us more about the history of the company? 

I had just sold my marketing company and moved to New York City. In 3 years, we had gone from start-up to over 30,000 clients, and were one of the leading companies in PPC in 2001. During my time there, most of our operations were handled by leading consultants or by our people in-house, but the one thing I enjoyed working on was processing the actual credit cards, I even created a script where every time we would process a credit card, it would sound like a cash register. We eventually had to take the script down, which is a good thing, I guess. Over this period, I had personally processed tens of thousands of credit card transactions and over time, I noticed various patterns and figured, why not automate it? Most consumers are good, honest people, but our job was to focus on the bad actors, those looking to harm others and then simply stop them. I met several people who really liked the idea.  We then were able to gather 40 investors, and preCharge grew. Over the years, the system adapted and changed but the goal always remained the same: to seamlessly allow commerce. The sad part is that whenever we would find a bad actor that was a merchant, they would sue to suppress the information, so we were often the target of lawsuits and various litigation issues. Those matters just became a cost of doing business. We put a lot of focus on compliance, audits, third-party reviews and ensuring compliance, and plan to continue that, and with this transparency built into our DNA, people will learn to trust digital currency and those behind it.

Have you always wanted to be the CEO of preCharge?  

No - my goal was never to be the Chief Executive Officer; I am more of a hands-on person. We had hired two CEOs in our past and sadly, the last one nearly destroyed the company. Working with my team and our people, I am doing what I can to be the kind of CEO people can be proud of, and hope to continue to do that until preCharge reaches the point where a more experienced and savvy CEO comes along.

What do you think the future holds for Blockchain and cryptocurrencies? 

I find most things in life are evolutionary, meaning they are bound to happen. It's pretty easy to project - space travel, quantum computing, digital currency, all inevitable solutions. What most people tend not to realise is that we've always had digital currency, as long as people transacted business digitally. When you send money through a Money Transmitter like Western Union or use your credit card online, you are in fact doing it digitally. The only difference with cryptocurrency is that it's open and secure, for all to see. People lost trust in the closed loop natures of payment systems and frankly, I don't blame them. I have first hand witnessed some pretty horrific things banks do, and frankly, it's sad. Digital currency is an absolute; governments and many banks are trying to suppress it, but you can't. The very nature of digital currency is that it's open and secure; it's just applying value to one form of digital currency over another, and as it stands, people will ultimately find that they can trust an open source and public system over any government or bank, which is what everyone ultimately wants. preCharge is simply the medium to make that happen.

What lies on the horizon for PreCharge? 

We are working to build out a partner network, where people can train and educate others on financial management and digital currency. We plan to focus a lot on teaching people - from high school students, all the way up to regulators, as to what digital currency really is. We want to show people that it's there, it's real and although you may not be able to touch it, it’s the very thing governments have been doing for decades. We already have several classroom visits set up, and are looking to build out more. We have a number of online certifications planned, where people can learn about it online in their free time. Ultimately, we want to educate people on what it is and what it is not. Not so much teach people about preCharge but rather, what is Blockchain technology, what is digital currency and why is it so important. Ultimately if we can do that and prove to people that it's real, then maybe they will find they can trust an open system as a means of validation, and hopefully the solution they ultimately trust is preCharge.

I am happy to see the industry starting to mature, and we plan to be there when they graduate!

Website: https://www.precharge.com/

Levels of financial technology (FinTech) adoption among consumers has surged globally over the past 18 months and is poised to be embraced by the mainstream, according to the latest EY FinTech Adoption Index. An average of 33% digitally active consumers across the 20 markets in the EY study now use FinTech.

The study, based on 22,000 online interviews with digitally active consumers across 20 markets, shows that the emerging markets are driving much of this adoption with China, India, South Africa, Brazil and Mexico averaging 46%.

China and India in particular have seen the highest adoption rates of FinTech at 69% and 52%, respectively. FinTech firms in these countries are particularly successful at tapping into the tech-literate but financially under-served segments, according to the study.

The UK has also shown significant growth, with adoption rates now standing at 42%.

The EY FinTech Adoption Index evaluates services offered by FinTech organisations under five broad categories – money transfers and payments services, financial planning, savings and investments, borrowing and insurance. It reveals that money transfers and payments services are continuing to lead the FinTech charge with adoption standing at 50% in 2017, based on the consumers that were surveyed. 88% of respondents said they anticipate using FinTech for this purpose in the future. The new services that have contributed to this upsurge include online digital-only banks and mobile phone payment at checkout.

Insurance has also made huge gains, moving from being one of the least commonly used FinTech services in 2015 to the second most popular in 2017, now standing at 24%. According to the study, this has largely been due to the expansion into technologies such as telematics and wearables (helping companies to better predict claim probability) and in particular the inclusion and growth of premium comparison sites.

Imran Gulamhuseinwala, EY Global FinTech Leader, says: “FinTechs are clearly gaining widespread traction across global markets and have achieved the early stages of mass adoption in most countries. The EY FinTech Adoption Index finds, on average, one in three consumers already consume FinTech services on a regular basis. FinTechs, particularly in the payments and insurance space, have been very successful in building on what they do best – using technology in novel ways and having a laser-like focus on the customer. It really is now a critical time for traditional financial services companies. If they haven’t already, they need to urgently reassess their business models to ensure they are able to meet their customers’ rapidly changing needs. Disruption is no longer just a risk – it is an undisputable reality.”

According to the study, 40% of FinTech users regularly use on-demand services (e.g. food delivery), while 44% of FinTech users regularly participate in the sharing economy (e.g. car sharing). In contrast, only 11% of non-FinTech adopters use either of these services on a regular basis.

The demographic most likely to use FinTech are millennials – 25–34-year olds, followed by 35–44-year olds. The study revealed that people in this age range are comfortable with the technology and that they also require a wide range of financial services as they achieve milestones such as completing their education, gaining full-time employment, becoming homeowners and having children.

There is however also growing adoption among the older generations: 22% of digitally active 45–64-year olds and 15% of those over 65 said they regularly use FinTech services.

The study has also identified a new segment of users, the ‘super-user’. These individuals use five or more FinTech services and account for 13% of all consumers. ‘Super-users’ generally consider FinTech firms to be their primary providers of financial services.

The EY FinTech Adoption Index says that FinTech adoption is set to increase in all 20 markets covered by the study. Based on consumers’ intention of future use, FinTech adoption could increase to an average of 52% globally. The highest proportional increases of intended use among consumers is expected in South Africa, Mexico and Singapore.

Imran Gulamhuseinwala says: “There are those who believe that FinTechs struggle to translate the innovation and great customer experience that they create into real customer adoption. The EY FinTech Adoption Index suggests that thinking is now outdated.

“FinTechs are not only becoming significant players in the financial services industry, but are also shaping its future. Their new propositions are increasingly attractive to consumers and this trend is only set to continue as awareness grows, concerns are allayed and new advancements are made. Traditional firms, who sometimes struggle to deliver the same seamless and personalised user experiences, will undoubtedly need to step up their efforts to remain competitive. I think it’s likely that we will see greater collaboration between traditional firms and FinTechs in the future.”

(Source: EY)

In a keynote speech to the American Chambers of Commerce, in Brussels last week, Fiona Dawson (Global President of Mars Food) warned that failure to reach a new UK-EU free trade agreement for food would threaten jobs and lead to higher consumer prices.

Noting that protectionist trends are threatening to undermine global trade and make the world less connected, she noted that the future relationship between Britain and the European Union is a critical test as to what future will unfold. Specifically she:

• highlighted how a return to trade barriers would undermine integrated supply chains, which are vital in the large food sector;
• warned that the higher business costs arising from such trade barriers would ultimately flow through to consumers in higher prices and could threaten jobs;
• cautioned that regulatory divergence could undermine future UK-EU trade, and should be avoided;

Jobs and Consumers Must Come First

• urged all parties to the Brexit negotiations to focus on the mutual benefits that close UK-EU economic ties provide; and
• emphasised that politicians must put workers and consumers at the forefront of Brexit negotiations.

Key extracts published pre-speech:

"Brexit clearly poses some problems, but the fact is Britain has decided to leave the EU and the task now is to look forward and ensure that the decisions taken from this point forward achieve the most positive outcome for all concerned."

"The absence of hard borders with all their attendant tariff, customs and non-tariff barriers allows for this integrated supply chain, which helps to keep costs down. The return of those barriers would create higher costs which would threaten that supply chain and the jobs that come with it."

"If Britain ends up trading with the EU on the basis of WTO rules, 'Most Favoured Nation' rates would come into force. In the area of confectionery that alone would mean tariffs of around 30%. For animal products, it would be 20%; for cereals over 15%; and for fish and fruit over 10%. Significant new tariffs would also apply outside the food sector, notably in the area of clothing and textiles. Unfortunately there is no way that those costs could be absorbed without flowing through to consumers in the form of higher prices."

"It is a fact that Europe after Brexit will remain a critical market for UK exports and likewise the UK will remain an important market for goods produced and manufactured in other European states. There can be no economic advantage either side restricting trade with a large market situated on its doorstep. In simple terms, if the UK and the EU fail to agree on a new preferential deal, it will be to the detriment of all."

"Reaching an agreement will require compromise and an appreciation of the economic interdependency between the UK and EU. It requires an acceptance of the benefits that common regulatory standards and the movement of labour can bring, and an understanding that the imposition of significant trade barriers would ultimately hurt everyone and undermine, rather than strengthen, European unity."

"Other member states should remember this is not about 'punishing' Britain for her decision to withdraw but rather about finding the best solution for European and UK workers and consumers. That consideration must come first as we build the future."

(Source: Mars, Incorporated)

Insurance services represent an opportunity for banks to improve customer experience and increase customer loyalty.

Consumers have an average of four different insurance products split across three providers, with 63 percent saying they would prefer to deal with a single provider, according to a new survey by Collinson Group.

Following the rise of price comparison and aggregation services, the way people buy insurance has fundamentally changed – competition is fierce, prices are lower and consumers use multiple providers. However, Collinson Group research amongst 2,500 loyalty programme members has found that customers would value a more streamlined way to buy insurance through a single provider. Banks can capitalise on this opportunity by offering insurance products through loyalty initiatives, or value-added packaged accounts and credit cards – improving the customer experience, boosting loyalty and generating incremental revenue.

When asked why they would prefer insurance products with a single provider, 79 percent cited convenience. More than half (51 percent) said they would expect better prices for staying loyal and 39 percent said they would expect to receive added benefits or rewards for staying loyal to one provider.

When asked why they use multiple providers, more than a third (37 percent) said their provider doesn’t offer different products, and more than a quarter (27 percent) said they don’t feel there is any benefit for staying loyal.

An additional Collinson Group’s global study of more than 6,000 affluent middle class customers further emphasises the opportunity for banks, showing a high perceived value of insurance products. The findings found that 72 percent of affluent middle class customers highly value health insurance, 66 percent travel insurance and 63 percent lost cards assistance. Banks should also consider other non-traditional assistance products such as identity protection, to help in the modern age of cyber-crime. The research found that 57 percent of customers rated identity theft protection as a highly valuable service, and that fears over data security influences what brands or products they use. Offering identity protection insurance is another way banks can show commitment to customers.

Mark Roper, Commercial Director of Collinson Group said: “Banks have an opportunity to boost loyalty and make consumer’s lives easier by including insurance products in loyalty programmes or within packaged accounts and credit cards. Given the data banks hold on consumer spending, using this information at the right time to offer highly personalised, timely and relevant insurance products would be valued by customers and can also generate incremental revenue for banks.

“Due to their substantial buying power, banks can achieve economies of scale to deliver value across insurance products and pass this back to their customers. They can offer insurances at the low prices their customers expect due to  a group risk approach, packaged as part of a bank account or credit card. This will provide differentiation and builds on or leverages existing loyalty to the bank’s core products –bank accounts or credit cards.

“With effective integration, banks could offer travel insurance to a customer that has just booked a flight, or car insurance when they buy a new car. This will be well received by customers who indicate in the research that relevant offers are welcome, and by consumers that like the idea of a ‘one stop shop’ but need to feel that the provider offers great value and quality products. Banks should be capitalising on this consumer need by seizing the opportunity to create more meaningful and deeper emotional relationships with their customers, and grow their bottom line.”

(Source: Collinson Group)