The customer pain point defined by the limited function of outdated banking monoliths was realised some time ago. And, as we look at the state of the market in 2019, there are many vendors out there all vying to do the same thing: to bring banking to the state of digital usability that other industries such as e-commerce and entertainment reached a long time ago. Below, Finance Monthly hears from Tobias Neale, Head of Delivery at Contis  on the three key areas to look at in order to be a successful FinTech in 2019.

Naturally, like any crowded marketplace, brand differentiation is vital in order to stay competitive in FinTech. After all, when there is an approximated £20 billion in annual revenue up for grabs in the UK alone, it makes sense that there are plenty of incumbents as well as new players joining every year, aiming to get a piece of the pie.

So, what truly makes a successful FinTech company stand out right now? Where are the areas that brands can truly get ahead? Also, and perhaps most importantly to consider, does FinTech look set to eclipse traditional banking altogether, or is there a way the two can grow closer?

Innovation

Building new infrastructure for financial services is not a new venture – the big payment giants have been shaking up the financial solutions market through regular technology investment projects for some time. However, given the recent wave of innovation instrumented by new and emerging rivals, it is increasingly evident that innovation has gone mainstream – beyond the big banks – and that continuous development is integral to keep pace for everyone, whether new or established. These new entrants, who put technology innovation at the forefront of their business, recognise that it is not just a case of creating technologies to contend with the big banking and payment giants, but also creating with them in order to integrate with and support them.

Agility

FinTech moves fast, and the pace at which a service provider can be disruptive is that which sets competitors apart. Start-ups have the advantage of being free of legacy systems that often prove a huge inhibitor to modernising quickly enough to keep pace for their long-standing and well-established counterparts. As a result, new entrants will do well to take advantage of this agile upper hand by ‘moving fast and breaking things’ with mobile-focused products. By quickly adapting to fill gaps left by traditional banking providers they can deliver services in record time.

Customer service at the core

In recent years, customer trust in the banking and payments industry from both the has been put to the test thanks to disruptions and data breaches affecting both businesses and consumers alike . This means that there is ample room for disruptors to capitalise on the need for a reliable and trustworthy provider that offers great services, extensive support and guidance, particularly for prospects that are looking to establish their first increment of banking services into their ecosystem.

What is important to remember is that disruption is not all about overtaking older established rivals – part of what makes a successful FinTech in 2019 is the ability to integrate with these institutions and move digital transformation for the industry and shared customers. Keeping innovation, agility and customer service at the core of a company’s proposition is what will truly define those looking to follow the success of companies like Monzo and Revolut, in 2019 and far, far beyond.

With over twelve years of experience in the industry, he is currently the CEO of Maxpay and Founder of Genome.

How big is the online payments market in Malta and how is it developing?

 The online payments market in Malta is almost exclusively export-oriented. With a population of less than half a million people (that’s about 0.1% of the EU) and a landmass that’s about 0.1% of the area of the United Kingdom, the three islands are mostly a platform for international business servicing the European Economic Area. Because Malta is an EU member state with a compliant regulatory framework, as well as a country that is part of the Schengen visa-free economic area, it has over the years become a hub for financial services companies, with payment gateways, card issuers, e-wallets and online foreign exchange traders located here, but serving Europe and the world. With a banking sector consistently ranking amongst the top 10 of the world’s most reliable banking sectors (according to World Economic Forum rankings), the regulatory framework in Malta is very favourable for establishing and growing financial services firms and opening multinational branches.

What are the challenges associated with operating cross-border in this sector? How do you overcome these alongside your clients?

 When it comes to cross-border payments, the two key difficulties that are a persistent barrier for businesses of all sizes in every industry are speed and cost, according to a report by the Bank for International Settlements. Payments sent from practically any country to another are often more expensive, slower, and less transparent when compared to domestic payments. The reasons for this are that cross-border payments are more complex, considered to involve more risk and fall under more rules and regulations as opposed to payments made within one country.

Small and large companies experience different problems with cross-border payments, with large corporations that make high-value international wire transfers experiencing problems with the lack of transparency, including transparency of FX rates, and smaller businesses working with smaller payments that face high transaction costs.

This is why at Maxpay we have made a strategic decision to be transparent about transaction rules, payment clearing timelines and fees upfront. The traditional payments infrastructure is complex and we can’t control fees charged by third parties, which is why with new FinTech products like Genome, we rely on regulated but optimised infrastructure partners. Our goal is to minimise the cross-border friction in terms of costs, requirements and processing time, and we are making great progress in this area with features like an instant currency exchange and instant payment transfers.

Tell us about the specific payment solutions that Maxpay offers.

 Maxpay’s focus is on online businesses accepting payments worldwide, so our payment service provision solution is geared towards enabling all legal businesses to accept local payment methods from international customers. But this solution isn’t a mass-market plain-vanilla type. The complexity we discussed earlier is partly solved by our payments solutions’ dashboard with extensive reporting on fees and exchange rates. Yet the real key in our niche is for online sellers to maintain healthy merchant accounts - this is why we invested in proactive chargeback monitoring by partnering with Covery, an AI-powered risk management and fraud prevention platform. We’re also constantly growing our risk analysis team who consult our clients on optimising their e-commerce websites to keep payment success rates high and chargeback rates (and costs) low. So while the PSP solutions market is crowded, we like to think that our clients turn to us for our expertise.

We are progressing toward a cross-border world with fewer middlemen and less paperwork, resulting in faster and cheaper access to financial services for more people over a variety of platforms.

How is Maxpay developing new strategies and ways to help your clients?

 We take both evolutionary and revolutionary paths to better serve our clients. With the evolutionary one, we use data science to test automation and smart algorithms that help lower costs and raise payment success rates with new tools like smart payment routing (for lowering transaction costs) and automated retry logic (for better success rates). We also realise that traditional banking is in flux, so we’re developing challenger finance ecosystems like Genome for business. So while finance still involves a lot of paperwork and switching between different systems, with Genome, we have unified personal and business finance, as well as made services for online merchants accessible from within a web and a mobile app. In the process, we’re solving the pain points for large and small businesses with more transparency, instant payments, and lower fees when compared to traditional banking.

What do you think the future holds for online payments?  

We are now witnessing the very first attempts at improving the overall efficiency of cross-border payments and international finance. These will eventually interconnect local payment infrastructures and then expand into closed finance ecosystems across borders, increasing the role of peer-to-peer payments. While being generally optimistic about overcoming obstacles, the FinTech community still needs to work on addressing legal, technical, and operational risks. In the end, we are progressing toward a cross-border world with fewer middlemen and less paperwork, resulting in faster and cheaper access to financial services for more people over a variety of platforms. There’s definitely room for more efficiency, better user experience, and we very much plan to be a part of that future.

About Maxpay:

More than just a payments service provider, Maxpay is a platform built by online business owners for online business owners to accelerate growth. At Maxpay, global teams provide access to a broad set of merchant tools within the payments processing stack, deliver deeper local payment insights and offer customised risk intelligence solutions that lower chargebacks. The committed network of online payments professionals offers online businesses live support, resources, and tools to scale worldwide.

 For more information, please go to maxpay.com

One sector at the forefront of this disruption is FinTech, in which firms enjoy cost bases lower than those of traditional banks and freedom from the restraints of branch networks and legacy IT systems. As such, they can provide faster services and more innovative products, thereby revolutionising systems and processes, says Rosanna Woods, Managing Director of Drooms UK.

Digitisation will be a priority for firms

FinTech trends have disrupted the industry for over a decade now, and I believe this is the year challenger banks will become prime targets for investors. Large FinTech firms – and traditional financial companies – will also be more likely to get involved in the M&A space as digitisation remains a major driver for deal-making.

In terms of funding, 2018 marked the best-performing year for UK FinTech M&A (US$457.8 billion), which shows that investors are still hunting for the next big FinTech investment. And although Brexit has brought a lot of uncertainty, it could also mean that investors have a lot of dry powder.

Prime examples of challenger banks gaining momentum include Monzo’s crowdfunding exercise and Revolut’s increasing user signups to its finance app that facilitates both worldwide currency and cryptocurrency.

In the digital payments space, we have already seen the roll-out of digital payment methods, particularly via mobile, allowing consumers to make payments at a single tap of a card or mobile device. As banks continue to seek technologies to speed up customer service, they will look to FinTech companies to integrate with their own systems and enhance customers’ experiences.

In terms of funding, 2018 marked the best-performing year for UK FinTech M&A (US$457.8 billion).

Core drivers for M&A

In many ways, growth in FinTech innovation and M&A transactions each contribute to their own success. Businesses and investors are both attracted to opportunities that technology could bring in the industry, and its potential to automate services. This leads to several M&A transactions taking place for geographical expansion and technological innovation.

But will Brexit impact or slow down the developments of financial technologies in the sector? In my opinion, only moderately, if at all. In fact, Blackstone’s acquisition of Thomson Reuters (US$17 billion) last year shows that transaction values increased due to businesses continuously embracing innovation in digital banking, payments, and financial data services.

Although Brexit may have some impact on investors’ confidence in the UK, it is possible that they are simply biding their time. It is common for investors to practice caution when investing in foreign markets. But despite the transactional and regulatory uncertainty we currently face in the UK, I suspect that investors will see the growth in the FinTech space as opportunities to invest in emerging technologies.

Technology’s broader influence

Technology is not just the focus for investment, it is also helping the investment process too. In particular, it has paved the way to making the due diligence process for M&A more efficient and secure. The creation and utilisation of virtual data rooms to help solve the problems faced by dealmakers and investors has been embraced by the industry as good investments.

From a technology provider point of view, artificial intelligence, machine learning, and analytics have digitised the screening process of deals and greatly reduced the time undertaken for due diligence, as well as improving workflow. This is also true for many other sectors such as real estate, legal, life sciences, and energy.

As such, it makes sense to predict more investment in technology that will help the digital transformation of businesses, as demonstrated by Siemens’ investment in software companies in 2007, which generated US$4.6 billion in 2016.

Although Brexit may have some impact on investors’ confidence in the UK, it is possible that they are simply biding their time.

The heightened desire of investors to acquire businesses for digital transformation remains – as previously mentioned - one of the core drivers for M&A. Although Brexit may eventually present unexpected challenges to the FinTech sector, it will continue to thrive. This belief is supported by a report by Reed Smith that stated 31% of financial organisations plan to invest over US$500 million in the FinTech sector this year.

Opportunities amid uncertainties

Taking stock of the aftermath left by the EU referendum, Brexit has undoubtedly created lingering uncertainties and ever-present threats to deal making. But the overall value of UK M&A activities between 2017 and 2018 shows that Brexit did not prevent UK M&A from performing. In fact, over 140 M&A transactions in Q1 2018 were FinTech deals.

This was due to many factors, such as the strong relationship between UK and US investors, as well as the pound’s devaluation after the EU referendum, which made cross-border deals more attractive for global investors and particularly those deals involving businesses specialising in RegTech and digital payments.

Although the on-going Brexit negotiations are not going well and that a no-deal Brexit, despite not being ideal, is still a real possibility, recent history suggests that the FinTech M&A sector will not be as heavily affected as it might seem. The signs indicate that investors will continue to pursue new technologies that can help make business operations more efficient.

Going forward

What concerns businesses and investors in the UK is the fear that London may lose its crown as a FinTech hub. They will be looking for a Brexit deal that replicates the passporting rights the City currently enjoys and would also allow the UK economy to grow by about 1.75% by 2023 (as firms continue to trade in the City).

Moving forward, the difficulties Brexit presents are not insurmountable for the FinTech sector. It will continue to grow and disrupt the industry – whether the UK leaves the EU with a deal or not – and although it is wise to make contingency plans, businesses should avoid making drastic decisions. The FinTech sector is here to stay and it is well-equipped to withstand the many challenges ahead.

Industry experts CACI forecast that 2019 could very well see mobiles usurp PCs as the main appliance for internet banking. It’s even predicted that by 2023, 72% of Brits will use apps as their main financial management source.

But mobile banking has already transformed how we spend money. Let’s explore how.

1. Average Spending

Thanks to banking apps, it’s easier than ever to access money. Access to phone signal granted, you can transfer money, anywhere, at any time. However, with this comes the risk of overspending.

And many people can’t resist the temptation to buy more than they need. In fact, a recent report by Bain & Co. revealed that on average, mobile payment users spend twice as much as those who don’t.

Therefore, what we’re spending money on – as well as how we’re spending it - has already been hugely affected by mobile banking.

2. Budgeting Apps

Very often, with the risk of overspending comes an increased demand for easy money-saving tactics. Unsurprisingly, banks have been quick to jump on this need by bringing out budgeting apps.

Although increased spending remains common among mobile bankers, these apps could help to provide a remedy. Because managing finances is a priority for most people, they have been quick to take off.

So, mobile banking hasn’t just influenced how we spend — it’s changing how we save, too.

3. All-Inclusive Banking

Banking apps make it more straightforward to exchange money and make purchases, therefore they are particularly valuable for people who struggle with traditional methods of money management.

For wheelchair users, visiting a local bank or an ATM can often be inconvenient. But thanks to these apps, financial affairs can be managed from home. The need to venture into town to take out cash or pay for goods is now a thing of the past — and this is transforming lives.

Likewise, this has revolutionised how people with specific learning differences monitor their money. Features like colour-coding are ideal for users with Dyslexia, Dyspraxia and ADHD, for example.

For people who live far from the town or city, driving to an area with a hole in the wall or bank is no longer necessary as banking can be done from home. Using this kind of app could even reduce your carbon emissions.

Mobile banking isn’t just benefitting its users — it’s helping the environment.

How we spend, save and manage our money has been completely transformed by mobile banking. No wonder its set to rise in popularity over the next four years. This is an exciting time for the financial world. How will it affect your finances?

In contrast to other gambling conferences, ICE London seeks to forge a connection between the offline sector and the online ‘iGaming’ sphere. The attendee list and event's floor reflect this amalgamation, with major brands from both land-based and online casinos showcasing their products alongside one another.

Organisers describe ICE as ‘the entire gambling ecosystem in one place’, referring to how not only casinos, but affiliates, payment solution providers, software developers and marketers are also represented. The jam-packed three-day event gives a good overview of the trends and topics shaping the multi-billion dollar industry. Here are a few themes at this year’s ICE which give us strong indications of what to expect for the future of gambling.

Blockchain Solutions
The relationship between cryptocurrencies and online gambling is a natural one; both crypto-technology and iGaming stem from digital innovation, and both concern varying degrees of risky investment. As more online players wish to preserve their privacy, cryptocurrencies present themselves as a practical alternative to traditional payment methods. FinTech companies offering integration of crypto-payment solutions to online casino platforms will be making their rounds at ICE, networking with those interested in the prospect of committing to the still burgeoning world of blockchain technology.

Facial Recognition Software
There are a number of focus points specifically for the land-based casino sector, as evidenced by this year’s exhibitions at ICE. One such technology which is peaking the interest of many attendees is that of AI facial recognition for land-based gambling establishment. The technology is developed to heighten security, strengthen statistics, and improve player experience. One provider of facial recognition is Fincore, a company which is demonstrating the benefits of monitoring player behaviour through assigning IDs to faces.

The suggestion is that this technology will allow casinos to more efficiently identify valuable players, problem gamblers, and trouble makers. “The Facial Recognition system uses the latest developments in Data Science (AI) to create a more easily managed and personalised offering,” says the B2B Commercial Director Jamie Maskey. Monitoring individual players with facial recognition will help casinos personalise VIP offerings and share information on cheaters and problem gamblers with other casinos.

Customer Verification Solutions
The importance of complying to KYC (Know Your Customer) particularly in the gambling industry can not be understated, and at this year’s ICE there will be a few FinTech companies showcasing their KYC solutions. One such company is Safened, a FCA-licensed payment institution that claims to make customer verification process faster, simpler, and more thorough. With so many regulated brands looking for cost-effective means of complying to KYC in light of the 4th EU Anti Money Laundering Directive and GDPR, it’s clear to see why these solutions are proving a hot topic at ICE. “We believe that the cascading of checks is an effective way to form a holistic view on a client and in the process to filter out fraudsters. There is a lot of activity in the digital KYC space, but what sets us apart is the fact that we are a regulated financial institution that can offer an end-to-end solution”, says Kirk Gunning, CCO of Safened.

Content Marketing
For online casinos, the increasing trend of outsourcing marketing and content services is evident by the growing number of creative agencies present at ICE. “Many online casinos that have traditionally relied entirely on affiliates are realising the value of increasing the degree to which they invest in their own marketing”, explains Lucy Jacobs from PlayFrank UK. “Stricter marketing regulation means online casinos want to retain control over their own advertising for 100% compliance, but it’s also a matter of realising how important a brand’s own content marketing is for a sustainable online presence and long-term brand awareness.” Offered by the many agencies at ICE are branding services, content writing, translation and localization and SEO. A number of discussion panels will also be held with regards to the topic of marketing gambling products.

Game Providers
Major casino game providers will, as usual, be present at ICE - including the biggest names in the industry such as NetEnt, Play’N’Go and QuickSpin. However, this year also marks the debut of some smaller but fast emerging providers. Red Tiger Gaming Limited is a relatively young name but is making waves at ICE where the developers are showcasing their unique Daily Jackpot games. Online casinos are continuously looking to strengthen their game portfolio and will be keeping a close eye on the next big providers in the industry.

Esports
Although esports betting has not yet exploded quite as exponentially as some have predicted, many existing sportsbooks believe there simply been a failure to seize the market. As such, a lot of networking is focused on bringing esports expertise together in developing a successful esports betting product. An ICE workshop held on the 6th of February will look at the potential of esports in relation to the gambling industry, focusing on an esports market overview, forecast and valuation. With the global esports market currently valued at $493 million, it seems that there are plenty of opportunities in this sphere. What sportsbooks have realised is that there are unique challenges of establishing a brand within the esports community - a community rather unlike the fanbase of traditional sports. It is these perceived challenges that the workshop intends to tackle.

Affiliate Programs
A record number of gambling affiliates have led to a need for more - and better - platform management tools than ever before. From casino operator's perspective, affiliate management tools have become increasingly important in keeping track of various partnerships and their costs. The London Affiliate Conference (LAC) will be held right after ICE so that those offering and seeking affiliate deals can attend both conferences. A panel talk will initiate discussion on how to organise affiliate programs and find appropriate partners, as well as how to offer better deals as an affiliate name in an increasingly competitive field.

There are 8,500 operators and 150 countries in attendance at this year’s ICE - most likely beating the record of last year's 3,000 attendees. Though the full scope of ICE’s impact on the gambling industry is better understood in the context of an annual overview, there’s no doubt that this year’s conference will be pivotal in helping shape and reflect the discussions central to the gambling industry and its future.

Fortunately, Viktoria Ruubel, Chief Product Officer at IPF Digital, is here to help you stay ahead of the curve, looking forward to 2019 and the top trends that will dominate the industry over the coming year.

1. Banking in your back pocket

Mobile banking has been around for barely five years, but now it is ubiquitous. In the next five years, 72% of the UK population is expected to be banking via their phones. Paper money is dated – new transactional experiences define our daily spending, with contactless cards sharing a crowded market with mobile tech like tap-and-pay.

2018 saw millennials flocking to digital wallet providers like Monzo and Revolut. In 2019, this sort of tech will go mainstream, with a wider range of providers and services, all targeting improved customer experience, financial inclusion, and digital service.

2. The global fintech opportunity

The global payments industry processed over $1bn per day in 2017. In Latin America, and Sub-Saharan Africa, where traditional institutions shied away from investing, fintech firms have plugged the gap in the market.

The restrictions enforced by old-fashioned lenders have catalyzed the development of mobile banking. Mobile payments enabled by technology grant financial inclusion to users who wouldn’t meet the criteria for traditional banks

Smartphone adoption lies behind the accessibility of mobile banking – with a smartphone and internet access you can be part of the financial system without a bank account. More people than ever can contribute to the movement of money around the world, resulting in more opportunities for individuals to improve their financial situations, and for business to leverage credit for growth.

In 2019, fintech companies will recognize the massive markets that await outside of the traditional financial ecosystem.

3. Open Banking matures

Open Banking has won over its early sceptics and now has a strong place in the market, driven by the adoption of PSD2 regulation, new strategic partnerships, and increased customer expectations. 2019 will see open API reach maturity, with new products, customer experiences, business models, and opportunities created along the way.

Stripe, Mint, N26 – these are just some of the players using open API to offer products to both banked and unbanked segments. Meanwhile companies like Alipay and WeChat are building exciting new infrastructure which could drive the financial services revolution globally.

4. Applying artificial intelligence

The rapid advances in AI-enabled customer intelligence will drive the great leap forward in the 2019 financial industry, notably consumer lending. Chatbots and virtual assistants grew in popularity over the last two years, and consumers are increasingly comfortable using them to request information. Advances in voice tech mean that virtual assistants could soon submit loan applications on your behalf with a vocal signature.

Meanwhile, digital devices and pay for each other, to each other. Lending will become ‘real-time’ and AI learning will allow credit products to be personalized to each customer’s behavior.

For example, AI technology could analyse customer spending, and then suggest saving plans, helping consumers budget and borrow more sustainably. AI would then remind customers when they might need to borrow, how much to borrow and the schedule they should follow for repayments.

5. Securing data with biometrics

In developed global markets with high levels of smartphone use, biometrics are the next big step for financial services, in 2019 and the medium term as well. Biometrics will soon be integral to verification processes and payments - mobile banking apps already allow users to log in and pay with facial recognition, voice recognition and fingerprints.

The more financial institutions rely on digital, the more data security becomes a concern. Biometric technology one solution, maintaining the transactional security crucial to any sound financial environment.

In fact, according to a Capgemini report, digital laggards in the financial services industry are in danger of losing up to 35% of their total market share to digital pure-plays. So, from upgrading ATMs to give them iPad-esq interfaces, to making mortgage applications possible from a smartphone, we have seen a mass of new innovations from the traditional banks this year.  

But this hasn’t been an easy process. While some financial institutions have been slow to adapt, others have attempted such a myriad of new innovations that they’ve been at risk of trying to achieve too much change at once. Below Matt Phillips, VP, Head of Financial Services, Diebold Nixdorf UK/I, provides several reasons 2019 is set to be the year financial institutions focus on what really matters.

In 2019 we’ll see a new approach. This will be the year when financial institutions hone their technological direction. Many will pick one key area to focus on, and they’ll do it really well. Here’s a look at why, and what else is in store for the industry in 2019…

1. Moving on from pilot schemes. From Natwest’s Cora to the National Bank of Canada’s experiments with blockchain, we have already seen banks implement many different forms of new technology in pilot schemes. In 2019 however, the onus will be put on getting a return on investment, which is likely to involve taking a focused approach to new innovations.
2. Honing homegrown talent. With the political climate having the potential to impact the free movement of tech skills across borders, some businesses are predicted to go into ‘supply shock’. They must therefore nurture and develop their own talented employees.
3. Getting the pace right. While millennial and Gen Z customers might leap towards the latest technology, some baby boomers would rather crawl before they can walk. One of the key challenges for banks in 2019 will therefore be to develop their technology strategy at a rate that suits the multiple demographics within their customer base.
4. The end of gimmicks. We’ve all got excited by next generation apps and banking assistant robots that have been announced this year. In 2019 banks will concentrate on making their new innovations count from a customer journey point of view.
5. Open banking opportunities. PSD2 was set to be the game-changer for 2018, with many in the industry seeing the legislation as a threat, as well as an opportunity. In 2019 we can expect the legislation to start to impact consumer trends.
6. New branch formats. Branch formats have been refined over the last few years, with many banks adjusting their portfolios to include flagship stores in high footfall areas, and a consolidated number of smaller stores, supported by transaction-heavy pop up or mobile branches in convenient locations. It has been a time of change and 2019 will see these new branch portfolios mature and get results.
7. Comfortable consumers. In 2014, 19% of consumers had biometrics on their smartphones. By 2018, this had risen to 7-in-10. The consumerisation of technology like this makes it much more comfortable for banking customers to use, so we can expect to see a growing amount of technology such as biometrics in banking.
8. Adding value with analytics. As a globe we are creating a mind-blowing 2.5 quintillion bytes of data each day. For banks, the challenge is to put data to work. In 2019, we will start to see banks use data more intelligent across different platforms to improve the customer journey, personalise the experience and predict how the customer will need to interact next.
9. ‘As a service’ on the rise. The ‘as-a-service’ economy is well underway in the UK, with analysts expecting the XaaS market to grow 38% by 2020. Banks looking to make a better use of their internal teams in a competitive environment can be expected to jump on this trend to boost their internal agility.

In Africa, the want for cryptocurrency is growing, and according to Iggi Vargas at Paxful, this could affect the wider markets.

The interest in bitcoin has continued to grow at a rapid pace. Exchanges are reporting that a lot of Africans, especially millennials, are taking over the platforms.

The “Cheetah generation”

The term “Cheetah generation” was coined by Ghanaian economist and author George Ayittey. It refers to the young and hungry generation of African graduates and professionals. This is the generation that is trying to change the status quo for the better.

“The Cheetahs do not look for excuses for government failure by wailing over the legacies of the slave trade, Western colonialism, imperialism, the World Bank or an unjust international economic system… To the Cheetahs, this ‘colonialism-imperialism” paradigm, in which every African problem is analyzed, is obsolete and kaput. Unencumbered by the old shibboleths, Cheetahs can analyze issues with remarkable clarity and objectivity.” (Ayittey, 2010)

The Cheetahs offer the people of Africa a new way of thinking. Ayittey says that their outlooks and perspectives are “refreshingly different” from past African leaders, intellectuals, and/or elites.

Ayittey compares them to what he calls the “Hippo generation”. This refers to the generation before the Cheetahs.

“ [The Hippo generation] lacks vision - hippos are near-sighted - and sit tight in their air-conditioned government offices, comfortable in their belief that the state can solve all of Africa’s problems.” (Ayittey, 2010)

According to Ayittey, the Hippos are the ones that “are lazily stuck complaining about colonialism, yet not doing anything to change the status quo.”

With that being said, how does the Cheetah generation translate to the Africans’ new-found passion for crypto?

Hunger for crypto

When it comes to cryptocurrency, Africa is a shining star. This is because of one major factor: peer-to-peer finance. Africans have joined the peer-to-peer revolution. It is doing wonders not only for their economy but also their culture. The Cheetahs seem to be embracing this as a good number of African millennials have been joining peer-to-peer marketplaces. This is important for many reasons.

First, it shows that peer-to-peer platforms have an amazing reach. Africa does not have, by any means, cutting-edge technology but they find a way to make a living off of cryptocurrency. Being able to send money around the world without the bank’s high fees are a big deal. Whether it be to a sibling halfway around the world or to your neighbor, being able to send money anywhere is an advantage for Africans.

Second, it shows that peer-to-peer platforms are easy to use. Many non-users will find bitcoin intimidating at first and give up on learning. This shows not only that everyone can use peer-to-peer platforms, but also that it's easy to learn if you’re willing.

Third, it shows that the underbanked aren’t a lost cause. With Africa being so underbanked, bitcoin serves multiple purposes for them. It serves as both a way to hold your money and a way to send out money.

Fourth, it shows that everyone has the power to take control of their own finances. Some Africans actually make a living by trading cryptocurrency, and you can too.

Lastly, it shows that a revolution is in the works; a peer-to-peer revolution. The benefits of peer-to-peer exchanges are being seen all over Africa. The idea of fast transactions and innovation flawlessly aligns with the Cheetah Generation. Clearly cryptocurrency and peer-to-peer finance are the right tools for the new generation of Africans to get ahead and prosper. But it doesn’t just have to be Africa. All over the world, peer-to-peer platforms are showing significant amounts of growth. They are also becoming a popular method to buy bitcoin.

The time is now

It seems like we can learn a lot from the Cheetah generation, including how to make money with bitcoin. If they can have the right set of mind, the world can follow suit. The drive of these young prodigies is something to look up to. They have the attitude that can conquer and inspire the world. Taking control over your own finances is a big deal, and it seems the Cheetahs have figured it out. The peer-to-peer revolution is here and it’s time to get in on it.

As an enabler for increased competition and customer choice, open banking is transforming the banking sector for consumers, challenger banks, FinTechs and traditional players alike. The UK’s version of the second Payment Services Directive (PSD2), open banking is forcing UK banks to open their data sets via secure application programming interfaces (APIs), resulting in them re-positioning their services away from being one-stop shops for financial products, to open platforms, where consumers can embrace a more modular approach to banking by allowing third parties to access their financial data directly.

As we enter the second full year of an open banking environment, Kevin Day, CEO of HPD Software, the asset based lending and factoring software platform, discusses the opportunities and challenges that the sector is likely to face in 2019. 

Rapid and significant innovation in financial services to grow the market considerably

Open banking’s data sharing rules are aimed at developing new technologies and innovation, which have been advancing at a rapid pace, and which is expected to continue, resulting in increased competition between banking providers and FinTechs. The open API data, which includes account aggregation, improved financial management, credit scoring thin-file customers and integrated lending and accounting platforms allows companies to create bespoke products and target potential customers in a completely new way.

Through such innovation, customers will be able to quickly compare accounts, helping them to understand where to find the most suitable products. Financial management meanwhile could now be offered by an array of financial service providers, from established banks to charities, in a move that encourages customers to shift from traditional ‘under one roof’ banking services to specific, individualised services that are suitable for their personal financial situation. The potential revenue opportunity across a range of SME and retail customer propositions is estimated by PwC to be £2.3bn at the end of 2018, of which £1.8bn could be cannibalised by existing or new players in the market, with the remaining £0.5bn representing new revenue opportunities. Based on forecasts for adoption across the same markets over the next four years, PwC expects incremental revenue will total £1.3bn, where £5.9bn is ‘revenue at risk’.

A lack of homogenous technical standards may make operating processes susceptible to corruption and companies need to be clear on how they will safeguard their data against fraudulent activity.

Enhanced industry collaboration

Another considerable advantage of open banking is the enhanced industry collaboration that will result from data sharing as providers, traditional banks and FinTech companies will between them be able to offer something that the other cannot. With so many players in the financial services industry, the formation of partnerships between banks and their FinTech competitors will result in increased choice for customers, and will help both players to survive and expand their services in a rapidly evolving industry. Any new products formed through such forward-thinking partnerships will likely see the benefits at both ends of the spectrum.

Traditional customer platforms are going to change

Open banking will enable a new league of consumer profiling that will require minimum effort to find the most relevant information on products and services across the industry that are tailored to their individual needs and history. From personalised investment solutions to retail overdraft decoupling, the shift in data optimisation will become the new normal, altering the way traditional price comparison platforms operate. This movement won’t stop there: bank account and transaction data can provide an opportunity to collaborate across different sectors where retailers, utility providers and tech companies can function together on aggregated data platforms.

Access to consumer data increases responsibility around security

The opportunities created by initiatives such as open banking, which have the potential to transform the industry, of course come with responsibilities, and one of the major challenges will be around managing risks related to security. A lack of homogenous technical standards may make operating processes susceptible to corruption and companies need to be clear on how they will safeguard their data against fraudulent activity. Any major data breach is likely to negatively impact retail customer uptake – many consumers consider their financial data more personal than their medical information. With complex chains of data access, both banks and FinTechs must also consider the obstacles associated with responsibility for any security breaches, and ensure that their software is able to identify, predict and react to risks or breaches in good time.

By bringing third-party providers into the banking system, there is a considerably increased risk of scammers gaining access to customer information.

Liability becomes an issue

By bringing third-party providers into the banking system, there is a considerably increased risk of scammers gaining access to customer information and the finance provider will be liable, unless there is evidence of fraud or negligence. With both banks and FinTechs alike facing increased security threats, without proper legal clarification, it’s inevitable that finance providers will do what is necessary to push liability on third parties.

Open banking is still a relatively new initiative

A lack of awareness and education around the capabilities of open banking will be its greatest challenge in the short term. Finance providers will need to convince customers of the benefits of sharing their data in the first instance, and as yet, banks are not marketing open banking, which directly impacts the ability for it to innovate and provide new propositions.

While the corporate sector and SMEs in particular seem far more willing to embrace open banking, consumer review body Which?, has found that 92% of consumers had never even heard of the initiative. As such, banks and FinTechs need to embark on a considerable education programme for consumers to better understand the benefits of open banking and how it can help them take control of, and better manage their finances, from monitoring spending to making better savings and investment decisions.

For finance providers in the Asset Based Finance space, there are opportunities to leverage efficiencies from open banking, in particular in the area of cash processing with the potential for virtual bank accounts to streamline cash reconciliation. There are also value added services that can be offered to SMEs to assist them with other aspects of running their businesses. Finance providers will need to have an open mind and be prepared to collaborate with FinTechs and other technology providers.

Once banks have stronger propositions to offer their customers, they will become more vocal and the lack of awareness will gradually cease to be an issue. For the financial services industry and new entrants alike, it is important that all parties embark upon this education programme with the proper systems in place for proper levels of monitoring, security and scalability to ensure a success of the industry.

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These challenges have been widely overlooked to date and businesses have been left to cope with these cashflow difficulties themselves, with minimal support made available from banks or other financial services. Zoe Newman, Head of Partnerships at Capital on Tap, explains below.

Fintech enterprises have begun to recognise the need for a solution here and are helping to innovate trade credit through new partnerships and co-branded trade card products. This innovative and automated trade credit solution enables wholesalers to better support their customers by issuing them with co-branded trade cards which provide instant credit with which to fund business purchases.

For many independent retailers, short-term cash flow issues are a familiar experience which will have had a significant impact on their business and impeded their ability to buy goods. Typically for independent retailers or restaurants, this experience often involves a cycle of not being paid by clients and customers and, as such, not being able to afford to purchase goods from wholesalers. Often, when looking for an alternative solution, many will turn to short-term loans, the majority of which have high-interest rates which make them unsustainable economic solutions, with the perils outweighing any perceived benefits. Needless to say, this cycle is detrimental not only to these retailers but also to the independent wholesalers who are reliant on them for business.

For many independent retailers, short-term cash flow issues are a familiar experience which will have had a significant impact on their business and impeded their ability to buy goods.

However, the new partnerships between fintechs and wholesalers are providing a much-needed solution to this problem and offering SMEs access to trade credit for business purchases without the strings of many short-term alternatives. The co-branded cards also give customers a sense of security should they come into any unforeseen costs and doesn’t restrict them to only spending with the wholesale partner.

By partnering with a fintech finance specialist, wholesalers are able to help SMEs access funding which will allow them to grow their organisation and take advantage of business opportunities, while also encouraging more sales with them. This scheme is a far cry from many bank-issued credit cards or short-term loans, as not only does this give their customers more freedom and flexibility, but it also removes some of the costs and burdens associated with the high-interest short-term loans that many will have had to resort to previously.

Through these partnerships, wholesalers are also set to benefit. This is in part due to it increasing their customers’ spending potential with them. Additionally, thanks to the branded nature of the cards issued, customers are reminded of the wholesaler every time they take out their wallet or use the card, providing valuable exposure for the brands.

Ultimately, these partnerships are a welcome development for many SMEs who are finding that banks are not providing sustainable or suitable funding options for their businesses. For many of these businesses, the sums and terms on offer to them do not fit their needs and meeting the strict repayment fees can be difficult due to the peaks and troughs in their trading periods. In addition, it can take several weeks for these businesses to be approved bank-backed funding, while many fintech partnerships guarantee a decision and access to funds within hours or days. It is the hope that this will remove the reliance some businesses have on short-term loans, which have historically allowed instant credit but with high-risk terms and extreme interest rates. As such, many SMEs will see the advent of partnerships between fintechs and independent wholesalers as offering a much-needed solution to these problems.

For many of these businesses, the sums and terms on offer to them do not fit their needs and meeting the strict repayment fees can be difficult due to the peaks and troughs in their trading periods.

At Capital on Tap, we have developed a number of relationships with independent businesses and wholesalers, such as JJ Food Services, to help these businesses overcome many of these issues. The partnerships between fintechs and independent wholesalers are enabling these businesses to inspire increased customer-loyalty and customer satisfaction by recognising a need in their customers and providing a viable solution. The initiative also means that these businesses are no longer just wholesalers, but they are also service providers - adding a new string to their bow.

Three quarters (75%) of UK small businesses have been rejected by banks when trying to access funding, according to independent research commissioned by Capital on Tap.

The research discovered that access to funding was especially difficult among smaller and micro businesses. Over two fifths (43%) of sole traders have had funding requests rejected while 44% of organisations with 10-49 staff experienced the same fate.

The study also revealed that almost half (48%) of UK small businesses have been left waiting for more than two weeks to receive a funding decision from banks, while more than a quarter of firms (27%) have had funding requests rejected outright.

David Luck, CEO and founder at FinTech Capital on Tap, said: “It’s clear that banks are denying small businesses the chance to fulfil their growth opportunities. Typically, smaller businesses have limited access to credit so the importance of having a facility that can provide a quick cash injection to invest in equipment or make the most of a busy trading period is essential to stability and future growth.”

The research also revealed that there is a strong diversity in the types of credit that businesses are looking to secure. The most popular funding application was for term loans (51%) with overdrafts (28%) and business credit cards (19%) also being very popular options. Out of those companies that had sought funding in the past five years, the majority (35%) had been looking to secure relatively modest amounts of funding, generally under £5,000.

“What we see from the study is that businesses are generally looking for small, flexible credit facilities, whether at times of need or opportunity. This is exactly where banks struggle to service the millions of SMEs in the UK as they are geared for consumers or large corporate clients. The next generation of entrepreneurs expect the flexibility and quick service from banks that they can attain in their personal lives, which includes easy access to funding. We are seeing the success of alternative lenders in the UK because there is a clear demand for this type of fast, transparent service.”

(Source: Capital on Tap)

Gold has long been known as a store of value to help investors weather turbulent financial markets. Below, Shaun Djie, Co-Founder and COO of Digix, explains why digital gold is a forward moving solution for everyone.

In recent years, it has also become far easier for the average individual to buy and sell gold. There are online bullion dealers and high-street shops selling gold, as well as exchange-traded funds for gold, which are effectively investment funds that track the price of gold.

However, while it’s now easier to purchase, the spread between what individuals pay for this asset and what dealers sell it for can be very big. This is especially true for small denominations of gold. Exchange traded funds overcome many of the associated complications of investing in gold but they tend to be more expensive than physical gold because of the inclusion of brokerage and management fees.

But for those interested in investing in gold and getting a better deal for it, the good news is an alternative to owning physical gold and relying on ETFs is emerging – thanks to blockchain technology.

Understanding blockchain’s potential

Blockchains are shared digital ledgers that record every transaction ever made on them. So physical assets like gold can be divided and represented by tokens, and blockchain technology can keep track of the ownership of those tokens.

Gold has become one of the first real-world assets to be tokenised and freely traded on the blockchain. With this comes a level of divisibility that hasn’t been seen before. Emerging gold ownership and trading protocols can ensure that tokens are minted on a proportional basis – so, for example, one token is equivalent to one gram of a physical gold held in a secure vault.

In some systems, the delivered gold is subject to verifications at the point of deposit into the vault, as well as at quarterly reviews by independent auditors. Hence, there should never be more tokens created than the total weight of physical gold bullion backing them.

Simplicity and liquidity

In this way, gold-backed tokens not only bring divisibility but also an easy, reliable and secure way to own and trade gold. Liquidity would increase, which would be good news for current gold investors and any prospective investors who may have been put off by an inability to access small denominations or by the fees that ETFs charge.

For existing investors, more profits from gold can end up in their pocket too. Buying a gram of gold through leading smart asset companies on the Ethereum blockchain costs under US$40, where as the retail price for a 1g bar hovers around the US$77 mark.

That’s because, by removing the physical and administrative costs of creating 1g gold bars, tokenised gold can get as close to the the spot price of gold than any method – regardless of the size of purchase.

Stability that investors can rely on

While these benefits will sound appealing to many investors, some may point to the historical volatility of cryptocurrencies as a sign that they won’t appeal to gold investors’ needs. It’s certainly true that the huge speculative bubble in virtual currencies has led to immense volatility.

However, gold-backed tokens are totally different to existing cryptocurrencies because of the bridge they have to the real world asset. To build confidence in crypto markets, gold-backed tokens are needed. They can also diversify portfolios and be used as collateral for lending and other financial products.

For existing investors, gold forming a central part of the crypto economy would be beneficial, pushing up the demand for the metal even further. These investors have always been able to see the value of their investment in this asset. However, through the tokenisation of physical gold, they can benefit from the liquidity, divisibility and security of these digital assets just as much as entirely new investors can.