Craig James, CEO of Neopay, tells Finance Monthly PSD2 will prove to be the most beneficial piece of legislation for fintech companies in years, and could completely change the face of the UK banking sector.

While technology has grown increasingly important in the financial sector, the “traditional” industry has been slow to adapt as consumers grow more frustrated by the lack of progress.

Innovative start-ups, looking to fill the gap left by the traditional establishment’s hesitation to change, have been growing in prominence as some banks, regulators and the government try to encourage new ways for businesses to engage with customers in a market suffering a long-standing loss of reputation.

Coming into force in January next year, the EU Payment Service Directive (PSD2) is the latest change facing one of the country’s oldest institutions, and could prove the catalyst for a technology revolution in the sector driven by innovation in personal banking.

Putting consumers at the heart of the fintech revolution

The most substantial change in PSD2 is enabling customers to allow third party businesses – like technology companies – to have access to all their bank data.

For fintech companies focussed on bringing new products to the market, this presents a new opportunity to create these offerings, without the infrastructure costs facing traditional banks.

Personalisation has been a buzzword in banking for some time, and there is no shortage of products from savings accounts to credit cards that are promoted as tailored to a customer’s needs.

However, while banks can provide a card with an interest rate suitable to the customer, the current offerings are incapable of working across multiple accounts, and cannot adapt to real time changes to a consumer’s individual circumstances.

PSD2 opens the possibility for fintech businesses to create “one stop shop” apps for bank services, allowing a customer to access and manage every aspect of their financial footprint from a single point.

These technology based products will put the consumer back at the heart of banking as businesses will be forced to adapt their products, or face getting left behind by smaller technology businesses which can suddenly offer better services.

It will also open entirely new ways for consumers to manage all aspects of their financial needs.

Better budgeting

There is already a plethora of products which can help customers with their finances, but they are severely limited in essentially being a replacement for paper based tracking. The onus is still on the customer to stay on top of the information.

However, by getting access to a person’s account information and financial history, a fintech company could create a genuinely personalised budgeting tool which could remove the management aspect from the customer.

By being able to monitor balances and outgoings in real time, these apps could be programmed to learn when particular bills are due and, if one account is lacking funds to pay, the app could notify a customer and then automatically transfer money from another account – or combination of accounts.

Considering that most people have more than one active bank account, this type of capability could prove invaluable for customers, helping them avoid unnecessarily falling into debt because they failed to move money around in time.

Real time debt solutions

For those customers who have already fallen into debt, new technology based bank apps could be created to offer real time solutions to help consumers pay down the money they owe, and get out of difficulties.

One of the major frustrations with current banking services, according to our research, is that balance updates are not always immediate and in some situations a user is not being shown an accurate account of their financial situation – which makes it hard to make decisions.

New banking apps could greatly benefit these customers by assessing their income and spending habits – while updating account balances in real time – and instantly suggest ways that customer could reduce their out-goings.

There is also the potential for banks to adopt these kinds of apps, which could be used to find or suggest savings plans.

The biggest benefit of this wave of products over existing services, is that they could monitor activity across multiple accounts in real time. The real-time aspect of these tools could help customers by instantly alerting them to unusual activity or if an account is in danger of becoming overdrawn.

While the “traditional” banking sector is at risk of being left behind by the speed of technological change there remains great potential for banks and fintech companies to introduce a wave of new products and tools for consumers that can help them manage their personal finances better.

PSD2 could kickstart the biggest chance the banking sector has experienced and, in the long run, will prove extremely beneficial for those institutions most able to implement technology at the heart of the customer offering.

September marks the 10^th anniversary of the contactless card, and in the last decade we’ve seen its use soar, particularly in recent years. Barclaycard believes its use will push a further 300% in the next four years.

 Finance Monthly has heard from Ian Bradbury, CTO for Financial Services at Fujitsu UK and Ireland, who shares his insights on how contactless has developed over the past ten years, and where he expects the payments landscape to go next.

It is hard to believe that contactless cards have now been around for a decade, as we have only in recent years seen them receive significant uptake with consumers. What was once seen as ‘scary’ and ‘unsafe’ to use, is now – thanks to its ease and education – resonating and growing in popularity with today’s consumers and now responsible for a third of all card transactions.

We expect this adoption of contactless payments to only grow, and become an increasingly important feature in the British payments landscape. Ultimately, both consumers and retailers are choosing to adopt solutions that are secure, quick and easy to use, as well as ubiquitous.

Not only are contactless payments quicker and easier to use than Chip and Pin, they are in a variety of ways more practical than small change and notes. The notable corresponding growth in debit card transactions also implies that this is not just growth fuelled by debt and easy credit – much of this increase will be a result of contactless payments being made purely due to ease. Moreover, contactless payments have the added value of fuelling other payment solutions such as Apple and Android pay and other wearable technology, which isn’t so easily done with Chip and Pin.

The success of contactless payments highlights consumers today are quick to adopt new payments solutions that focus on improving their experience. That said, because consumer experience can cover many aspects including convenience, security, speed and ubiquity, it’s essential that providers put in place ways to improve the experience over current solutions. If future payment solutions do not address all of these areas – which are fast-becoming an everyday expectation from consumers – then they are unlikely to be successful.

Late payments are an even bigger challenge for those medium-sized companies, with 94% of businesses employing over 50 people reporting that the issue is causing cashflow problems for them. This is according to new figures from Ultimate Finance.

In partnership with BDRC Continental, Ultimate Finance conducted research into the impact of late payments on the SME sector.

Other stats to be revealed by the research include:

• Overall, 81% of SMEs state late payments are an issue for them
• 51% of SMEs believe their business would run smoother if they had fewer late payments
• 82% of SMEs have up to £25k in late payments
• This rises for medium-sized companies which have an average of over £30k in late payments

Late payments within the sector are an increasingly public issue, with the main political parties vowing to stamp out the problem with legislation such as late payment reporting.

Ultimate Finance however, say that this sort of legislation can be incredibly divisive, and recognise that businesses of all sizes have their own cashflow issues. The company is now calling for the business community to come together and find its own solution.

Anthony Persse, Director of Strategy at Ultimate Finance commented: “We know that late payments can have a huge impact on small businesses. It is without a doubt, one of the biggest challenges faced by UK companies. However, there is a deep misconception that it is an exclusively small business issue which is simply untrue.

“This is leading to rules such as late payment reporting, which is creating an ‘us and them’ situation, when we should be seeking a workable long term solution. This is not just a case of the bigger boys picking on the smaller guys; cashflow and supply chain management affects every organisation, and should be tackled by the community coming together to support one another.”

The impact of government intervention has also been questioned by SMEs themselves. In research by BACS, 38% of small business owners questioned were unconvinced legislation would be helpful.

Ultimate Finance, which works with thousands of SMEs across the UK, believes that the business community needs to look at the way cashflow challenges affect companies of every size, and create an initiative or code of conduct that supports businesses holistically.

“We have taken a look at the numbers,” Persse says. “Many SMEs have significant late payment debt and it’s clear that something must be done. But current methods to help aren’t doing the job; just look at the bank referral scheme which is being evaluated for effectiveness.

“The issue is that politicians keep coming up with one-size fits all ideas and trying to dictate to businesses. Both SMEs and corporates are full of intelligent people who understand the challenges better than anyone.

They should be the ones to create the solution, with support from government and the wider industry – not the other way around.”

(Source: Ultimate Finance)

The Bitcoin (BTC), the first and original cryptocurrency worldwide, has been very volatile and seen incredible ups, with some downs, over the past few years. Last week saw its value fall once again, following days of gains, and after recently splitting to Bitcoin and Bitcoin Cash (BCC). Nonetheless, 1 Bitcoin is equal to approximately $3907.82 at time of publication.

It’s also not the only cryptocurrency, with many others following suit and gaining traction. What keeps it together and functioning without a central bank is the blockchain.

In light of the popular rise of this type of currency and its systems, and now the unexpected coin split, Finance Monthly has heard from several sources around the globe on the latest Bitcoin opinion and analysis.

Richard Tall, Partner and National Head of Financial Services, DWF:

The surge in the price of Bitcoin began with its recent SegWit upgrade, a technical update which has made transactions of the cryptocurrency more efficient than ever before.

Since then, the upswing in the price of Bitcoin has received much attention, with many commentators speculating that its value could even climb as high as $5,000. And as Bitcoin’s price continues to hike on a daily basis, more and more people are looking to invest their hard-earned cash in the cryptocurrency, for fear of missing out on a big pay-off.

It is also interesting to note that there is strong demand in South Korea and the Far East for Bitcoin. With unrest taking place across both of these regions, it may be that some are buying Bitcoin as a convenient and safe place to protect their wealth – just like when people turned to gold during times of conflict – which may also be contributing to this recent surge in price.

Historically Bitcoin has suffered significant swings in value and while its pricing is impossible to predict, it may take little more than investor sentiment to reverse recent gains.

Dominic Williams, President and Chief Scientist, Dfinity:

The Bitcoin community was divided even before news broke that it would be splitting in two. There is a possibility we will see major instability in both Bitcoin and Bitcoin Cash over the coming months. Whilst the former has recently seen its price soar, the latter has seen its price slump, and so if Bitcoin Cash were to gain momentum we could potentially see major swings between the two currencies. As per expectations the new currency did not significantly impact Bitcoin’s market capitalisation when it was released. We must keep in mind though that the very first block of the new currency was only mined two weeks ago.

Jakob Drzazga, Co-Founder, Brickblock:

Before the final acceptance of the segregated witness update, people thought that Bitcoin had hit a ceiling in terms of price growth potential, and now there is widespread relief within the community that something is being done about scalability. This relief, along with the new capabilities of the blockchain to process more transactions goes a long way to explaining the surge in Bitcoin’s value.

It’s likely we’ll see even more growth of this kind in the future as people find new and innovative ways to use the technology. For example, Blockstream Inc.’s plans to make the digital ledger which underpins cryptocurrency available via satellite signal is also likely to contribute to this growth.

Looking at Bitcoin price surges and dips in the past, the trend seems to be cyclical. A rapid rise in price, many new users buy Bitcoin, price reaches previously unimaginable heights, then people start taking profit and converting to USD / GBP, price comes down. Eventually new features cause another surge of interest and so the cycle repeats.

In light of this, optimism around growth should also be accompanied by caution. Even as Bitcoin gains momentum, it is still capable of market contractions like the one we saw on Tuesday, which saw more than $6 billion to evaporate from the cryptocurrency market cap in a matter of hours. Volatility is still a big concern for those looking to invest in cryptocurrency, and has led to mistrust, especially amongst some larger investors.

As the industry grows, it’s important that more sophisticated ways of managing volatility-related risks are developed in order to make the market more inclusive and attractive to those who favour more passive investments.

Jimmy Nguyen, Chief IP, Communications & Legal Officer, nChain:

Bitcoin’s significant price increase since the August 1 ‘hard fork’ demonstrates increased confidence now that uncertainty over the hard fork’s impact has come and gone without major incident. Investors are believing in the future of Bitcoin as not just a cryptocurrency, but also a technology system that can change the way businesses and consumers operate.

While ‘original’ Bitcoin’s dramatic price rise is getting much of the attention, it’s important to remember that the Bitcoin Cash chain has also survived. Bitcoin Cash presents a preferred choice for forces supporting unlimited block sizes and massive on-chain scaling. At nChain, we believe that is the path to Bitcoin’s true maximum value. Massive on-chain scaling is needed to enable countless technology functions which can, and should, be performed in a decentralised manner on the Bitcoin network. We should have a Bitcoin network that powers a faster Internet of Transactions, and enterprise-level capabilities for payments, data, communications, smart contracts, and many other functions.

Today, the technology is not yet advanced enough to accomplish this, but nChain is working on many innovations and intellectual property assets - such as scalability solutions, security improvements, and software development kits - needed to achieve that level of Bitcoin network growth worldwide. The Bitcoin token is the key to delivering transactions on the network, and the token’s value will increase as the transaction capability increases. While more than one Bitcoin chain can certainly co-exist, we believe the highest value proposition for the future will be on a chain like Bitcoin Cash that supports much bigger blocks, lower transaction fees, and more exponential growth.

Jordan Hiscott, Chief Trader, ayondo markets:

The success of Bitcoin and other blockchain currencies this year has certainly been impressive. When Bitcoin initially began nine years it was only found in the dark corners of the internet, whereas it’s now becoming almost a mainstream financial asset.

The spilt from Bitcoin to Bitcoin Cash in the form of a SegWit hard fork could have been a catalyst for derailing the impressive upward momentum in price and general popularity of Bitcoin, but so far we haven’t seen this. I would call Bitcoin the ‘poster boy’ for successful cryptocurrencies – it’s established, secure to a certain degree, has a huge mining community, a large amount of speculation traders and its price has increased at an exponential rate every year. To me, it’s no surprise that since the hard fork, its price has increased from $2,700 to an all-time high of $4,449.

Interestingly, the spin off to Bitcoin Cash has hugely underperformed at the same time, initially increasing to $600 on the day of the spilt to now trading at $300. In my view this abundantly shows the importance in having a secure blockchain, and support of the mining community, in relation to how the transactions and sizes were recorded. At this stage it would seem this is still yet to happen with Bitcoin Cash.

However, I do believe that the price of Bitcoin has been kept artificially low in the run up to SegWit and now that the fork has happened, without significant issue, its popularity in general will greatly increase. Bitcoin represents a technology that has a finite amount, and also importantly is in a digital form, so unlike fiat currencies it is not affected by central banks printing more money. It is this aspect which I believe will drive its popularity to the next level.

David Parsons, CTO, TrustMe™:

It’s clear the recent price surges in Bitcoin and Bitcoin Cash are composed of three distinct principal drivers. The first one involves demand generation coming from new speculators entering the market driven by media reports. In the case of bitcoin cash, new and old speculators are looking to reproduce their gains as they did when bitcoins where in the low hundreds. The second driver involves the hording of bitcoins as an appreciating store of value, as bitcoin goes up the supply further contracts thus correspondingly driving the price further up.

Lastly, the third driver and the most controversial one in my opinion signals the market’s realisation of BCC and BTC as the start of something that represents fundamental change to banks and financial institutions operations. Today, our economy relies on the ability of banks and other financial institutions to create currency out of thin air. When home mortgages or loans are issued by current financial institutions the physical currencies do not exits and never did. This enabled banks to dispense with the need of ever physically obtaining the actual currency being given out. BCC and BTC can be thought of as physical currencies that must be given and received. This is what’s driving the price surges, the realisation the current financial institutions will be forced to physically obtain the currencies to conduct business that they normally perform.

We would also love to hear more of Your Thoughts on this, so feel free to comment below and tell us what you think!

Transactions made in cash are losing ground to digital payments, and governments around the world are considering the merits of losing paper currency for good. Bloomberg QuickTake Q&A explains the advantages and disadvantages of a world without cash.

Video by Henry Baker

In light of new figures recently released by the British retail consortium which reveal that the popularity of contactless has soared ahead of cash, Ross Macmillan, head of research and intelligence at allpay Limited (the UK’s leading payment specialist) argues that cash is far from dead – especially when it comes to bill payments, which contactless can’t accommodate.

Ross told Finance Monthly: “With experts predicting the end of cash for the last five decades, it’s no surprise that with the increasing use of mobile payments and digital wallets, they’re at it again.

“However, for all the talk about cryptocurrencies and virtual accounts – the value of banknotes in circulation in the UK has actually increased threefold over the past 20 years, according to the Bank of England. As at end of July 2015, the total value of Bank of England notes in circulation stood at £62.6 billion. And with more than 18 billion cash payments made in 2014, according to Payments UK, which accounted for 48% of all payments made in the UK, you could argue cash is alive and far from dead.

“Consider some of the major household bills like rent, council tax, water, TV Licence, gas and electricity. Every year hundreds of millions of payments for household bills are made with coins or paper providing flexibility and convenience for the likes of the rurally isolated, unemployed, un/under-banked, digitally excluded, elderly or vulnerable. If they were unable to use cash, they’d incur arrears on their bills and fall into debt. In fact, according to industry data, in some of these sectors between 10% and 39% of payments are still made in cash and cheque. In energy and housing for example, there has been an increase in volume, albeit small, between 2014 and 15.”

Worldpay, the UK’s largest electronic payment processing group, has announced that it is to merge with US-based firm Vantiv, following takeover approaches from two American companies.

A preliminary agreement has been reached for Worldpay to combine with its US rival Vantiv valuing the British group at £9.1 billion. The deal also sees two executives take the run for the group, between themselves based in London and Cincinnati.

This comes after news that Worldpay’s takeover request was approached by both Vantiv and JPMorgan Chase, the world’s largest bank by market value. According to the FT, shares in Worldpay have soared in the days following the announcement of the deal.

Below Hayley Bevis, Partner and Head of Corporate at law firm Coffin Mew, gives Finance Monthly her response to this story:

“It is no surprise that Worldpay has received takeover approaches from two US companies and is now to merge with Vantiv. In our experience, the size of cross-border transactions over the last year has increased dramatically, as has the appetite of overseas acquirers and investors since the result of the Brexit vote. From our discussions with overseas acquirers and investors, the interest in the UK’s fast-growth companies has been triggered by a number of factors including the favourable exchange rate, but also as a way of quickly expanding an overseas acquirer’s capabilities, experience, customer base and technological advances. 

“We have seen a particular interest in the technology sector from overseas parties, with a UK based acquisition/investment often forming part of a larger “buy and build” strategy.

“In the case of Worldpay, tax and local law considerations will need to be taken into account by potential acquirers, as well as the often harder to define practicalities of how things are done locally in the acquirer/investor’s jurisdiction. 

“We don’t foresee this trend abating any time soon, so UK companies should brace themselves for a flurry of unsolicited interest – and not be surprised when approaches come predominantly from overseas.”

Steve Biggar, Director of Financial Institutions Research, Argus Research, discusses what's driving the recent pullback in US bank stocks and which names Argus has "buy" opinions on.

Artificial intelligence is shaping the future of retail. Smart algorithms and data analyses are creating sustainable performance benefits across all levels of the retail supply chain.

With its Omnichannel ePOS Suite, Wirecard AG is the first payment provider to offer a fully integrated solution for self-learning analyses based on payment data in combination with other data sources. The evaluations substantially support e-commerce and high-street retail in implementing the following central growth concepts: increasing customer conversion, reducing customer attrition rates, predicting future consumer behaviour and linking points of sale with e-commerce.

Jörn Leogrande, Executive Vice President Mobile Services at Wirecard: "Using our data evaluations and analyses, merchants can increase their metrics in important performance areas. Our previous experience has shown that sales increases in the double-digit percent range are realistic."

Wirecard's turnkey solution generates insights into customer segmentation and cohort analyses, for instance, to optimise marketing efficiency. This revolves around the concept of a data-supported, real-time view of a retailer's customer behaviour in its entirety and increasing the customer lifetime value - optimal customer retention.

Insights into customer attrition (otherwise known as customer churn) behaviour are another unique selling point of the Omnichannel ePOS Suite. Complex evaluations enable merchants to identify customers who may potentially shop elsewhere. By introducing appropriate marketing measures, the churn rate can be significantly reduced.

Analyses on anomalies, trends and sentiment, peak detection and time series based on country-specific data as well as cohort analyses to assess the efficacy of marketing measures are additional beneficial tools. The Omnichannel ePOS Suite can be used in pre-existing systems without incurring large expenses.

Markus Braun, CEO of Wirecard: "The Omnichannel ePOS Suite is the first step towards large-scale digital transformation in the retail sector. Over the next few years, data analyses using artificial intelligence and machine learning will play an increasingly important role in their business area. Based on our analyses, we are able to reduce risks and increase the chances of success for our partners. This means that all parties involved can gain a significant competitive advantage, which is why the omnichannel ePOS suite marks a decisive step for the future of payments."

(Source: Wirecard)

The number of purchases using debit and credit cards has more than doubled in the past 10 years, as contactless payments and online retail have driven a change in the way consumers pay, a new report from The UK Cards Association shows.

Debit and credit cards were used to make 16.4 billion purchases in 2016, up 146% from 6.7 billion in 2006. It means that 518 card payments were made every second last year by cardholders both in the UK and travelling overseas.

Over the past decade the growth in the number of card transactions has outstripped the rise in the amount spent, showing consumers’ increasing preference for using cards instead of cash for lower value payments. Last year the average value of a card transaction fell to £43.47, its lowest level in 15 years.

The new report, UK Card Payments 2017, highlights the impact of the growth in online spending and contactless payments. By the end of 2016, four in 10 (39%) card transactions were either online or made using a contactless card, compared to a quarter (24%) the previous year.

Graham Peacop, Chief Executive of The UK Cards Association, said: “Card payments play a central role in our economy, with spending equivalent to a third of the UK’s GDP. As consumers continue to make the switch from cash to contactless and with the rise of the app-economy, we forecast that the number of card payments will grow substantially over the next decade too.”

With card payments providing significant benefits to businesses, the number of retailers accepting cards increased to just over 1 million last year. The number of individual outlets accepting cards has jumped by 63% in the last 10 years to 1.3 million in 2016.

A total of £709 billion was spent by UK debit and credit card holders both domestically and overseas last year. Debit cards represented 75% of this total, amounting to £530 billion. This month is the 30th anniversary of the introduction of the debit card to the UK.

Payment cards were used for three-quarters (77%) of all retail spending in the UK last year. Cardholders spent the most on food and drink (£114 billion), followed by other services (£100 billion), financial services (£80 billion) and entertainment (£57 billion). A third of all card purchases in 2016 were made at supermarkets, while every fifth payment was on entertainment.

In 2016, there have been significant developments in the delivery of digital services to consumers, such as in-app purchasing and a new trend of fusing social media formats with payment capabilities.

In the next decade, the increasing use of contactless and mobile payments, particularly by younger people, will be a major source of growth for debit card payments, the report says.

The volume of debit card purchases is forecast to grow by 57% to 18.2 billion in 2026, four times the number made in 2006. In a decade’s time, half of all debit card transactions (51%) will be contactless. Credit card transactions are expected to increase to 3.7 billion by 2026.

(Source: The UK Cards Association)

People unlock their phone and, increasingly, shop and pay with the touch of their finger. They don’t get locked out when they forget a password because it has been replaced with a simpler, more secure option – mobile biometrics.  Whether using a fingerprint, an iris scan or a “selfie” to confirm identity, banks see biometric technology as a way to provide greater convenience and security to customers as they use their accounts. But, it’s still early days in mobile biometrics, and a new report from Mastercard and the Department of Computer Science at the University of Oxford highlights a big barrier. Only 36% of relevant banking executives feel they have adequate experience to deliver.

To overcome this knowledge gap, ‘Mobile Biometrics in Financial Services: A Five Factor Framework’ explores this fast-evolving technology landscape and provides bank executives with guidelines to successfully bring mobile biometrics to life. Simply put, they need to focus on Performance, Usability, Interoperability, Security and Privacy.

Some of these factors are more visible to the consumer, having a real impact on user experience, while others operate behind the scenes. But, long-term success for a bank requires that they address all factors equally to protect against threats. The framework can help financial service companies avoid the trap of focusing only on the ones their customers see.

“Biometric authentication has a lot of potential, but it is important to address the objectives of each of the Five Factors when designing solutions. Working together with Mastercard enables us to solve for realistic threats to the industry with the best technical and scientific ideas. Users will need consistency, quality and assured security for this technology to thrive,” said Professor Ivan Martinovic, Department of Computer Science at the University of Oxford.

Ajay Bhalla, president, Global Enterprise Risk & Security, Mastercard, commented on the research initiative in a blog, saying: “Effective mobile biometrics melt into the broader experience of consumer-centric financial services, giving people the power to instantly access their financial information or make a payment. They’re driving the trend toward a password-free future where digital identity is all about who we are, not what we remember.”

Considering that global sales of smartphones are expected to reach $400 billion by next year, people everywhere will increasingly have access to the tool that makes mobile biometrics possible. Banks see that as an opportunity, and with initiatives like the collaboration with the University of Oxford and pioneering biometrics solutions like Mastercard Identity Check Mobile, Mastercard is a partner to deliver widespread and responsible adoption of mobile biometric solutions in financial services.

As Bhalla continued, “This framework is fundamental to accelerating the deployment of mobile biometrics for consumers and industry alike, but collaboration is key. We can only achieve this if industry, academia, governments and technology vendors understand and contribute to the evolution of the Five Factor Framework for mobile biometrics.”

“Mastercard and Oxford have done important work in exposing some of the root causes for the inconsistent adoption of mobile biometrics in financial services,” said Ravin Sanjith, Program Director: Intelligent Authentication, Opus Research. “We expect the Five Factor Framework to become an indispensable aide for industry professionals and decision makers to have better informed, strategic discussions that drive towards more efficient and successful high-scale implementations.”

Anthony Duffy, Director of Retail Banking, UK and Ireland at Fujitsu told Finance Monthly:

“The news that biometric authentication is now consumers” preferred choice for their financial services security is further evidence that biometric technologies are coming of age. Biometric solutions have been used overseas for many years, with Brazilian, Japanese and Turkish banks all using Fujitsu biometric solutions to support day-to-day banking transactions. However, it is only recently that British banks have started to deploy the technology on a significant scale. We are seeing a growing confidence in the security and effectiveness of biometric technologies, perhaps in part brought about by both Android and Apple mobile devices using finger/thumb print scanner technology as an unlocking option. After all, as the technology goes from new to familiar, there’s a natural acceptance and understanding, which breaks down previous barriers to entry.

“Financial institutions are keen to enhance their security measures further and to improve customer service. Biometric technologies, by being unique to the individual, help achieve both goals. Their use often reduces the use of passwords, or even eliminates them altogether, while often also providing an audit trail. When deployed to help identify customers, their use can speed up the identification and log-on process, by removing the need for security questions.

“The reliability, security and accuracy of biometrics make them ideal for banking. Add to that the widespread adoption of biometrics on mobile devices, and it’s clear the technology is set to flourish. Consequently, at Fujitsu, we believe that the use of biometrics in banking is something we will see much more of in coming years.”

(Source: University of Oxford)

A new UN study reveals that Alipay and WeChat Pay enabled US$2.9 trillion in Chinese digital payments in 2016, representing a 20-fold increase in the past four years. The data shows that digital payments, using existing platforms and networks, provide access to a wider range of digital financial services, expanding financial inclusion and economic opportunity throughout China and neighboring countries.

The new report by the UN-based Better Than Cash Alliance, Social Networks, E-Commerce Platforms and the Growth of Digital Payment Ecosystems in China – What It Means for Other Countries, contains key lessons to help other countries include more people in the economy by transitioning from cash to digital payments. This shift could increase GDP across developing economies by 6 percent by 2025, adding US$3.7 trillion and 95 million jobs, according to a McKinsey Global Institute report.

"Social networks and e-commerce platforms are growing in every economy, whether large or small," says Ruth Goodwin-Groen, Managing Director at the Better Than Cash Alliance. "In China digital payments are thriving from these channels, bringing millions of people into the economy. This matters because we know that when people – especially women – gain access to financial services, they are able to save, build assets, weather financial shocks, and have a better chance to improve their lives."

"Widening access to financial services has always been at the heart of Ant Financial's mission and we are proud to have empowered more people to save, invest and gain access to capital. There is a quiet revolution underway and we know, firsthand, that our services are making a real difference to hundreds of millions of consumers. But, as this ground-breaking UN report highlights, this revolution is only just beginning. We see tremendous potential to bring many more people into the financial system, in China and markets around the world," says Eric Jing, CEO of Ant Financial Services Group, which operates Alipay.

Key findings from the report:

• More people have opportunities to save and invest. Platforms such as Alibaba's Yu'e bao make investing money into diverse sets of financial products more accessible for low-income populations. This product allows them to invest the money left on digital accounts, leading incrementally to long-term savings. From 2013 to 2016, Yu'e bao has grown to manage US$117 billion and is now serving over 152 million customers.
• Digital finance helps dramatically increase access to capital for small merchants. As of September 2016, a total of RMB 740 billion (US$107.3 billion) had been lent on the Alipay platform to over 4.11 million small and micro enterprises and entrepreneurs.
• Big data generated through these platforms helps to build credit-scoring history and boosted access to credit, particularly for low-income financially-excluded populations. For example, Sesame Credit offers an alternative creditworthiness assessment by examining the credit history, financial behavior, contractual capacity, identity, and social networks of users.

The study also found both Alipay and WeChat are expanding beyond China and investing in major fintech and payments providers. They are joined by other major communication platforms, utilizing existing social networks and e-commerce platforms to drive digital payments and financial inclusion. The report found opportunities especially strong in countries with a high smartphone uptake and collaboration between the private and public sectors:

• In South Africa, 78 percent of all internet traffic takes place over mobile channels – one of the highest rates in the world. However, despite the continued growth of adoption rates, only 15 percent of South Africans reported making a purchase on a mobile phone in the preceding month when surveyed in 2016.
• In India, both Ant Financial and Tencent have bought into the Indian mobile payments market, which is enjoying rapid growth under new regulation. Ant Financial and Alibaba invested up to $900 million in PayTM, as well as sharing staff and technical expertise. The result: PayTM has grown from 5 million to around 200 million users in just the last few years.
• Indonesia was the fastest-growing m-commerce market in the world in 2016, expanding 155 percent from January 2016 to January 2017. Some of this growth may be due to the release in 2015 of BBM Pay's Instant Mobile Payments. The popular BBM chat app has over 55 million users in Indonesia and continues to develop.
• In South America, markets have the infrastructure necessary to build payment ecosystems similar to those seen in China. Fifty-nine percent of the South American population uses social media, and 52 percent connect with social media over their mobile phone. Yet the digital payments space remains fractured, and no payments provider has linked their service to these platforms in a significant way, or vice versa.

(Source: Better Than Cash Alliance)