Two-thirds (66%) of UK consumers do not want to use a smartwatch app to make payments or purchase goods. That’s according to new State of Finance research from experience management company, Qualtrics, which examines financial technologies and payment preferences across the UK.

The finance-focused research, which surveyed over 1,000 UK consumers, also found that 81% of those questioned say that they have never used a smartwatch to pay for items.

Although the debit card has overtaken cash as the preferred form of payment, the research found that 97% of consumers still use cash at least some of the time. Surprisingly, over a third (36%) are still paying with cheques — almost double those who use wearables.

Commenting on these findings, Luke Williams, CX strategy lead at Qualtrics, said: “While it’s great to see both retailers and financial institutions investing in new and innovative forms of payment, it appears that consumers are not yet ready to transition away from cards and cash.

“Financial institutions need to think carefully about what payment approaches work for their customers and the technologies that will meet consumer demands. There is no substitute for offering experiences that consumers want to engage with, and payments are no different. The key is not imposing technologies that you think consumers should use, but listening to customers and tailoring your approach to their individual needs.”

(Source: Qualtrics)

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.

Finance Monthly hears from Colin Rowland from Apptio who asks the question: “Is this a trustworthy way to manage spend that is often billions of dollars across thousands of vendors and contracts, hundreds of employees, and more?”

Since the spreadsheet was popularised in the 80s, it has become the tool of choice for CFOs managing data and tracking costs across businesses. But in today’s digital age, spreadsheets are too cumbersome, slow, complex and constantly changing, to provide truly comprehensive oversight of costs and data in business.

Nowhere is this more evident than in managing technology spend, and it is abundantly clear that the IT department needs to upgrade its approach in order to properly provide CFOs with the monetary direction necessary to make smart, informed and strategic budgeting and investment decisions.

CFOs are required to oversee budgets across the whole business, yet while sales and finance have a wealth of tools such as CRM and ERP to assist them, there has been no purpose-built system for the technology department. With Gartner predicting that by 2022 businesses will be spending more than $3.9 trillion on IT, there is a huge level of pressure on finance professionals who need to track and manage these outgoings.

CFOs are required to oversee budgets across the whole business, yet while sales and finance have a wealth of tools such as CRM and ERP to assist them, there has been no purpose-built system for the technology department.

Kickstarting the culture change

To kickstart a move away from managing spend in static spreadsheets, organisations need to implement a culture change when it comes to technology, tracking spend, and understanding value of investments. Once viewed as simply a running cost of the business, technology is now a key deliverer of business value and revenue generation. That means the way investments are tracked, managed and communicated needs to be clear, open and transparent between IT and the business in a way that was previously unnecessary.

One method some organisations are adopting is the discipline of Technology Business Management (TBM). It focuses on providing a practical framework for finance and IT leaders seeking to manage and communicate the value of technology spend. It encourages translating IT usage and cost data from a list of bills into a source of business intelligence that can drive digital innovation. This allows the CFO to make more informed decisions when it comes to IT spending.

However, legacy tools simply don’t provide the added value needed to enable the communication and discussion needed around technology costs. It’s effective for data input and manipulation, but that’s no longer enough when complex technology costs need to be given to finance leaders in a digestible manner. Where this budgeting data is stored in various spreadsheets that are all siloed from one another, it can be nearly impossible to settle upon a single source of truth for the overall figures.

Spreadsheets do not enable actionable insights and cost analysis needed in the modern technology landscape for several reasons: they’re clunky, they’re rigid, and they’re slow.

Managing technology costs using… technology

This is where custom tools come in. They can provide additional capabilities and processes that enable businesses to not only accurately track their IT costs, but analyse them quickly and effectively, providing insights which are intelligible for those not well-versed in technology. And the more advanced technology solutions will be able to leverage machine learning to make this automated and free up employee time and resources for more value-additive work.

IT and finance leaders can then work together to drive forward business strategy based upon this knowledge. Spreadsheets do not enable actionable insights and cost analysis needed in the modern technology landscape for several reasons: they’re clunky, they’re rigid, and they’re slow.

Take the complex nature of public cloud spend, for example. A pay-as-you-go costing structure generates masses of data in by-the-minute billings that need to be tracked; meaning there is no guaranteed regular monthly spend to budget against. Even the most finely-tuned spreadsheet would struggle to track the thousands of lines on a cloud bill from separate business units, especially when many businesses are now embracing cloud services from multiple vendors.

The agility that disciplines such as multi-cloud bring also means that businesses must be prepared to adapt their cloud strategy quickly to suit their needs. Approaches that work now may be obsolete in three months’ time, and it is necessary to have a solid framework and the right tools to allow such changes to progress smoothly. For example, using Apptio’s TBM solutions, Unilever was able to move away from legacy infrastructure to cloud and increase the company’s digital innovation budget by more than 20% to provide consumers with an ‘intelligent’ buying experience online and in-store.

When it comes to technology, using spreadsheets to track and manage spend is holding businesses back.

Another complicating factor is the staffing cost associated with manning spreadsheets. Consolidating various spreadsheets to get a transparent view of IT spend can be a painstaking task, taking many hours and potentially resulting in human error. Custom tools can work to streamline and speed up these processes, while ensuring that errors do not occur. This allows IT teams to spend their time more effectively elsewhere, improving the overall efficiency of the department.

When it comes to technology, using spreadsheets to track and manage spend is holding businesses back. While custom tools may necessitate an upfront investment, they are undoubtedly worthwhile as a flexible long-term solution, providing agility, speed and clarity where spreadsheets cannot. By using such tools in conjunction with the principles of TBM, CFOs and the IT department can move away from spreadsheets and work towards a partnership in which insights into technology spend form a key part of the business’s ongoing strategy.

Technology is radically changing the way we live and interact. Customers are increasingly expecting smart, easy to use, one-click, mobile and personalised services. Insurance is part of this too, and as Irene van den Brink and Ingo Weber from the Digital Insurance Group point out, it’s time for the industry to be spiced up.

Data, analytics and AI are exponentially putting pressure on incumbent insurers to rethink every element of their business model. New initiatives are popping up, innovation garages are becoming popular in most traditional insurance companies and above all, we’re witnessing the rise of InsurTechs.

Initially, InsurTechs like Knip served as a wake-up call to incumbents. In the meantime, all insurance companies were at least talking about digital transformation. In the past few years we have seen an impressive rise of InsurTechs aiming to shape the future of the insurance industry and even though the number of start-ups is stabilising a bit, investment in more mature InsurTechs is consistently increasing.

Combining the efforts of InsurTechs and traditional players would have the most sustainable and impactful results in the market. Exploring ways to collaborate, we see a lot of traditional players setting up VC funds to invest, we see partnerships, and we see incumbents taking over InsurTechs in an attempt to accelerate their business. Let’s explore the three benefits that such collaborations could bring for both sides.

Combining the efforts of InsurTechs and traditional players would have the most sustainable and impactful results in the market.

Scalability

If we purely look at numbers, the impact of InsurTechs is still limited: traditional players still have access to a large customer bases whereas InsurTechs are often struggling with distribution and have a small market share. They both thrive on big numbers and scalability cuts both sides: a massive benefit of technology is the scalability it offers. In essence, technology allows for a digital model where increasing sales can be done at a stable cost level and the same goes for claims. Dutch digital insurer InShared was able to double in volume at the same cost levels, thus decreasing the cost ratio dramatically. Starting from scratch and getting to substantial numbers takes time.

While InsurTechs have innovation, they still lack volume, which is where the traditional players come in: they have the volume but need to find a way to serve at a lower cost. Getting existing portfolios on a platform helps in getting to higher volume and therefore, better ratios.

Time to market

The fast pace of an InsurTech can motivate traditional players to start ‘running’; there’s one comparison that has been used frequently – oil tankers versus speedboats. While traditional players used to be fine with yearly renewals of their base, InsurTechs are continuously developing or reinventing themselves – their middle name is ‘flexibility’.

AXA has announced that it’s launching a new cyber insurance with Slice Labs, which will allow them to launch a digital end-to-end cyber offering for SMBs in just three months. They use Slice Labs’ technology, underwriting and claims expertise - all combined with their own current dominant position. Another example is Zurich Insurance that works globally with the Digital Insurance Group to build new digital propositions on top of existing IT infrastructure at a record speed.

The low interest rate environment, weak insurance markets and changing customer behavior have put insurers’ profits under pressure.

The big challenge is to let InsurTech have its own speed, with different measures and KPIs, without trying to put the big oil tanker on top of it, as it will end up sinking. The best way to approach this is to use the entrepreneurial spirit and tech DNA of InsurTechs to inject new processes into traditional players’ offerings and work towards improving their customer experience.

Services

The low interest rate environment, weak insurance markets and changing customer behavior have put insurers’ profits under pressure. Acquiring new customers is becoming more expensive, which is why insurers need to find new ways to differentiate themselves from competitors and find new revenue streams. Introducing new services would be a great way to add new revenue streams as they not only open new business models, but can also add a huge value to clients.

Think of the way Ping An is boosting an ecosystem where they (as a traditional player) are the central platform to a number of different services (like health checks or telematics). InsurTechs can potentially be the providers of these services, and they could actually benefit from the enormous database that Ping An offers.

In Europe, Generali was given the exclusive rights of the Vitality programme (which originated in South Africa) as part of their plan to move away from simply paying their clients when things go wrong and focus on preventing bad things from happening. They see the Generali Vitality programme as a way to frequently engage with the customer and to reward them for looking after themselves, being careful and maintaining good health.

What we can take from all of this is that InsurTechs can undoubtedly help traditional insurers and contribute to building partnerships and ecosystems through API middleware, customer engagement platforms and new digital tools. When trying to determine whether they are friends or foes, it currently feels like they are both, but together, they have the potential to mutually benefit from one another and shake up the industry – watch this space!

About Digital Insurance Group
Digital Insurance Group is an InsureTech and a next-generation technology partner to insurers, banks and brokers globally that enables clients to innovate at record speed while leveraging their existing IT architecture.

This week Finance Monthly hears from Mohit Manchanda, Head of F&A and Consulting EXL Service UK/Europe at EXL, on the ever-evolving DNA of a CFO.

Business leaders have to stay relevant and ahead of the curve and adapt to the constantly evolving world of finance. This development has become ever apparent for the Chief Financial Officer (CFO) whose role now includes, strategies, operations, communication, and leadership as well as building knowledge surrounding the impact of emerging technologies within the finance sector.

Business outcomes

Advances in data software and automation are opening up avenues for businesses to generate valuable insights that can lead to major productivity improvements. Within the finance and accounting areas, technology is becoming a catalyst for change, driving innovation and providing operational efficiency in business-critical functions.[1] It is essential for CFOs to rethink how to utilise this opportunity to streamline their processes for efficiency, compliance and risk management.

CFOs have many objectives to commit to and by using cutting-edge solutions to enhance the transparency and accuracy of financial data, they can better manage the financial management process. Using automation within finance helps to free up high-value tasks and alleviates the pressure on the CFO to perform traditional activities such as, transaction processing, auditing and compliance.

Human X Machine

It is becoming more and more evident that the CFO will be looked up to, to drive the utilisation of new technologies, however they should try not to get ahead of themselves and forget about the day to day business. Becoming too attached to the hype surrounding Automation and Analytics can put other business objectives on the back burner. For example, managing costs and coming up with new ways to generate profit are tasks that require the CFO to use their own industry knowledge rather than relying on data or analytics.

New technologies can speed up processes and lessen tasks for CFOs; it is important for them to make choices and identify processes where AI, Automation and machine Learning adds value. An investment in one area of a business can create savings in another. In most companies, a high percentage of staff still perform tasks that can be automated through Machine Learning, and these tasks can be performed exponentially faster if self-learning algorithms are applied.

Given the pace of technological change, CFOs should carefully evaluate their point of entry and roll out multiple pilots or proofs of concept (PoC) to test and secure validation before deploying these new technologies.

New technologies can speed up processes and lessen tasks for CFOs; it is important for them to make choices and identify processes where AI, Automation and machine Learning adds value.

Introducing innovative technologies within the finance sector does aid in mitigating lesser tasks for the CFO, however it is not only the technology alone that enables a more streamlined work process. By combining talent, skill set and technology together creates a unified approach, resulting in major improvements throughout the business. For CFOs it means that they can move away from everyday traditional accounting tasks, therefore freeing up time to use their industry knowledge to focus on new business opportunities and provide strategic guidance.

Data & Domain

Organisations regardless of their size will collect large masses of data of which most will never be utilised. It is important for CFOs to understand which data sets are of value and which ones aren’t. Some may be needed for regulatory purposes and others for commercial predictions and products, however by disregarding the sets that are not of value helps to create a more streamlined result.

Starting to experiment with data will help identify potential risks before they are put into production. Machine Learning is all about data experimentation, hypothesis testing, fine tuning data models and Automation. Bringing data, technology and talent together in the form of ideation forums, innovation labs and skunk work projects allows discrete data to be tested for the first time. By bringing in Machine Learning, it can identify hidden patterns that could potentially harm the production process.

In order to drive the business forward, CFOs can translate data and combine it with industry knowledge. The data helps to provide insight within the industry which then contextualises their business decisions. Using data driven decisions CFOs can be confident in their choices within the organisation and use it to back up or prove their conclusions.

Putting data under the business lens enables a CFO to understand the repercussions that can occur through the improper use of big data. A business’ reputation is on the line if data violations occur. Not only will this result in legal sanctions, it will limit business operations, which will have a domino effect on resources and a company’s position compared to its competitors.

Therefore, CFOs should review all of the potential consequences before putting their experimented data findings into practice, including any legal, financial, and brand implications. This is where industry knowledge comes into play, using an expert committee on business data to inspect algorithms for unintentional consequences, results in less risk than normally associated with Machine Learning.

For CFOs to thrive in the digital age, it is essential for them to have a unified approach combining industry knowledge, data, technology and talent.

For CFOs to thrive in the digital age, it is essential for them to have a unified approach combining industry knowledge, data, technology and talent. By employing new technologies, data, talent and knowledge as one package, CFOs can add continuous learning opportunities for critical talent pools, and assist in the overall improvement of productivity within the business.

[1] https://www.business2community.com/big-data/17-statistics-showcasing-role-data-digital-transformation-01970571

Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, looks back at the history of globalisation to understand why it was on the agenda in Davos.

Luminaries from across the political and business world gathered last week for the World Economic Forum (WEF) Annual Meeting in Davos, Switzerland,

Although concerns about near-term global economic growth and trade tensions dominated conversations, the official theme of this year’s forum was ‘Globalisation 4.0: Shaping a Global Architecture in the Age of the Fourth Industrial Revolution’.

But what does this mean and why is it expected to be important for the future?

To understand what Globalisation 4.0 means, it’s useful to look back on the previous waves and consider how they have shaped the world we live in.

Technology driving trade

Globalisation 1.0 refers to the rapid growth in world trade, mainly during the nineteenth century.

It was driven by innovations in transport and communications, including the railways, steamships and the electric telegraph.

The subsequent reduction in the cost of global transport enabled the separation of production and consumption across international borders, making previously exotic products like tea, sugar and cotton readily available and affordable in markets like the UK for the first time.

Globalisation surged again after the Second World War – dubbed Globalisation 2.0.

Driven by greater international cooperation, the post-war period saw less protectionism and a rapid growth in world trade, at least in western economies.

Enabling offshoring

The third wave of globalisation is thought to have started around 1990.

Further advances in technology, including the spread of the internet, made it easier for different stages of production to be based in various locations across the globe, leading to the emergence of modern supply chains.

This enabled firms to further cut the cost of producing products and delivering services by moving their operations to cheaper locations, known as offshoring.

However, it’s also likely have contributed towards rising disenchantment, particularly where people in more advanced economies feel that they have not reaped the rewards.

The next wave, dubbed Globalisation 4.0, is set to be driven by the Fourth Industrial Revolution, which is happening right now.

The development of advanced technologies like artificial intelligence, big data, nanotechnology, the internet of things, 3D printing and autonomous vehicles all have the potential to significantly impact global productivity.

Opportunity and inequality

Unlike the previous waves, which have mainly affected goods-producing sectors, Globalisation 4.0 is predicted to have a much greater impact on services.

Unlike the previous waves, which have mainly affected goods-producing sectors, Globalisation 4.0 is predicted to have a much greater impact on services.

And we live in an increasingly connected world, so the speed of its adoption may also be faster than in previous waves.

Attendees at Davos not only discussed the opportunities that Globalisation 4.0 is expected to create, such as increased productivity, but also considered the growing evidence of a backlash against globalisation.

The WEF could be regarded as the ultimate representation of globalisation, so it is no surprise that meeting the challenges this latest wave of economic change brings for individuals and society were high up on the delegates’ agenda.

Below Russell Bennett, Chief Technology Officer at Fraedom, discusses the future prospects for AI in the banking sector, and what 2019 may hold.

AI is incredibly complex and doesn’t represent a single technology. Rather, it’s a multidimensional field encompassing a range of different technologies and methods, each supporting and supported by the others[1]. The technology’s pace of evolution has grown exponentially in recent years and if AI’s benefits and limitations are understood, it’s believed this technology will have a tremendous impact on the banking industry in 2019.

With so much potential ready to be unleashed, where exactly will we see AI’s influence in the banking sector in 2019?

Chatbots and Virtual Assistants

While chatbots have been used by financial institutions for several years, thanks to advances in AI their capabilities have continued to grow. Whereas they were once only used to answer generic FAQs, for example, most chatbots are now capable of initiating and performing tasks on their own. Thanks to these developments, Juniper estimates that the introduction of chatbots and virtual assistants will save companies $8 billion per year by 2022[2]. This is set to be only one of the benefits to banks with Gartner suggesting that by 2020 consumers will manage 85% of their total business interactions with banks through fintech chatbots[3].

Juniper estimates that the introduction of chatbots and virtual assistants will save companies $8 billion per year by 2022

While this could be a source of worry for the banking workforce, in reality, there should be little concern. Rather than acting as a replacement for employees, banks instead seem to be looking at AI as a tool to help release pressure points and empower the workforce with Accenture even predicting that banks that deploy AI wisely will see a 14% increase in jobs[4].

In 2016, Santander became the first UK bank to launch voice banking technology[5]. Of course, since then a large variety of global banks have adopted this technology in one way or another, suggesting that banks are looking at utilising AI beyond chatbots. In fact, with Mariano Belinsky, managing partner of Santander InnoVenture, discussing natural language processing[6], it seems to only be a matter of time before virtual assistants come into use.

Driving Customer Insights

Last year, we saw a clear disconnect between banks and their smaller customers. In these situations, intelligent automation could well be the answer to support businesses and provide a better service as well as working seamlessly with third parties and fintechs, rather than against them.

In our recent study of SMEs in the UK and US, we found that less than 20% of SME owners thought that banks they had dealt with over the past year fully understood their needs as a business, demonstrating a clear lack of engagement. In 2019, using automated data collection on an ongoing basis, behind the scenes, can ultimately ensure bank relationship managers are better equipped with in-depth knowledge about their customers; hence best positioned to support their business and provide a better service.

Less than 20% of SME owners thought that banks they had dealt with over the past year fully understood their needs as a business.

Security and Compliance

One of the key differences between AI applications and other, more traditional technological solutions, lies in AI’s ability to continuously learn from the data it is supplied with, hence refining its decision-making processes over time.

Cybersecurity is a current hot topic for the financial services sector and regulatory compliance is another. AI can add real value in both of these areas. Machine Learning platforms can be coded to identify user patterns and detect anomalous network behaviour, something that’s increasingly essential as cyber-attacks are often disguised with inconspicuous data or code.

In recent years, technology has been a disruptor and an innovator. Technology is increasingly helping shape customers’ wants, needs and expectations. With a raft of new regulation encouraging the use of technology in banking, there’s nowhere left for anyone to hide. The technology revolution is in full swing and for banks, it’s very much adapt or die.

In the very near future, it is likely that AI will completely revolutionise banking. It will redefine how banks operate, what innovative products and services they create and how they evolve the customer relationship. Banks must, therefore, embrace this new technology or risk of falling behind in an extremely competitive environment.

[1] https://www.accenture.com/t00010101T000000Z__w__/gb-en/_acnmedia/Accenture/Conversion-Assets/DotCom/Documents/Local/en-gb/PDF_3/Accenture-Redefining-Capital-Markets-with-Artificial-Intelligence-UKI.pdf

[2] https://www.juniperresearch.com/press/press-releases/chatbots-a-game-changer-for-banking-healthcare

[3] https://www.gartner.com/imagesrv/summits/docs/na/customer-360/C360_2011_brochure_FINAL.pdf

[4] https://www.accenture.com/gb-en/insights/banking/future-workforce-banking-survey

[5] https://www.santander.co.uk/uk/infodetail?p_p_id=W000_hidden_WAR_W000_hiddenportlet&p_p_lifecycle=1&p_p_state=normal&p_p_mode=view&p_p_col_id=column-2&p_p_col_pos=1&p_p_col_count=3&_W000_hidden_WAR_W000_hiddenportlet_javax.portlet.action=hiddenAction&_W000_hidden_WAR_W000_hiddenportlet_base.portlet.view=ILBDInitialView&_W000_hidden_WAR_W000_hiddenportlet_cid=1324582275873&_W000_hidden_WAR_W000_hiddenportlet_tipo=SANContent

[6] https://www.americanbanker.com/news/what-santanders-latest-bets-say-about-the-future-of-fintech

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.

Below Finance Monthly hears from Ronnie D’Arienzo, Chief Sales Officer at PPRO Group, on his top tech predictions in payments for 2019.

1. The Mobile Take Over 

Generation Z (those born between 1996 and 2010) are arguably having the biggest influence on societal trends today. For instance, most of those classed as Generation Y can remember the days of dial-up internet and landlines, as the World Wide Web wasn’t invented until 1990. This generation was born and lived at least a few years of their lives outside of the always-on, constantly connected, mobile-driven world that we know today. However, Generation Z has been born into the era of the internet and mobile devices, and don’t know life any other way.

The oldest of this generation has now begun to enter employment and has the spending power which means their demands have quickly driven societal expectations with regards to how mobile technology should be recognised at virtually every consumer touch point – particularly within the retail and banking sectors. In fact, within the next four years, Gen Z will account for 40 percent of all consumers, and their expectations for fast, seamless and secure retail and banking experiences will be higher than ever.

Without a doubt, having a mobile first solution will be even more critical in 2019 should both the physical and online retailers and banking institutions want to survive on the torturous British highstreets. WompMobile, in collaboration with Google, analysed their eCommerce clients and found that those which used Accelerated Mobile Pages (AMP) increased conversion rates by 105%, decreased bounce rates by 31% and increased click-through rate from search engines by 29%[1].

2. Rise of Alternative Payment Methods (APMs)

Visa and Mastercard account for only 23% of global eCommerce today; by 2021 that number will be as low as 15%[2]. This is driven by merchants realising that in order to reach a broader global consumer market, they need to offer the payment method of their customers’ choice. Unlike the US and the UK, for example, where a strong and established card acquiring model exists, many markets prefer ‘alternative methods of payment’ (often this is culturally driven).

Card centric cultures, such as the UK, that heavily depends on debit and credit payment cards, seeing alternative payment methods enter the market, such as PaybyBank app, Venom and Klarna etc. It is also worth noting that in China UnionPay (local credit card) recently overtook Visa as the world’s largest form of card payments by transaction value and number of users. Even ApplePay is entering into the non-debt, cash based German market.

The list is almost endless as there are approximately 350 relevant APMs worldwide, but it is key that the merchant chooses only what is needed for them and ensures checkout pages are relevant and not cluttered. 2018 has seen many Payment Service Providers (PSPs) and Acquiring Banks recognise this and begin to add APMs to their portfolio for merchants. However, if merchants don’t address cultural payment differences with the help of their PSPs, 2019 will see them miss out more than ever. Consumers don’t take any hostages and if you can’t give them what they want, they will quickly go to a competitor who can.

3. Trend towards omni-channel shopping

There is much hype over brick-and-mortar stores becoming a thing of the past. However, with consumers craving something tangible, I predict that in 2019 we will see the online shopping phenomenon begin to penetrate physical stores.

For some consumers, nothing e-commerce has to offer can quite measure up to the physical in-store experience. High street outlets are also recognising that creating a social and omni-channel experience is key to bringing footfall back.

In fact, leading global retailers like Amazon and Alibaba are now experimenting with the newly revived power of hands-on shopping. For example, Amazon recently opened a store in New York offering a range of bestselling items and additional items that were chosen to directly reflect consumer buying behaviours in the region. The concept store is set to turn traditional shopping on its head by replicating the virtual within the physical. Copying the structure of the Amazon website, the store has products organised by headings already known to online shoppers such as "Trending Around NYC", "Frequently Bought Together" and "Amazon Exclusives."

Alibaba Group also seems to believe in the renaissance of physical stores, as it recently debuted its first ‘Fashion AI’ concept boutique in Hong Kong. The store displays a selection of Guess apparel with the help of a "smart mirror" that shows product information on a special screen while shoppers are examining the items. The smart mirror points to where the garments in question can be found, utilising another way to bring the digital shopping experience inside physical stores using digital signage.

While digital kiosks aren't unknown to brick-and-mortar retail, in 2019 digital signage, will begin to offer additional interactivity, increased engagement, and a seamless omnichannel experience for consumers. For example, just one of the many benefits will mean customers will be able to use the interactive screens to order goods in-store to be delivered direct to their front door. Shoppers will be able to enjoy product visualisation that was once perhaps only available online via digital installations in physical environments, where experience will become a central point to the store of the future. Besides offering improved product visualisation, digital signage will also allow customers to browse goods that are not available in stores and select direct home delivery. All of this will be made possible with the introduction of omni-channel payment methods, such as Alipay and increasingly PayPal, that can be used online and instore with the same account, also acting as loyalty cards, to make payments easier than ever.  Just about any shopping scenario will be possible.

4. Mergers & Acquisitions

The digital payment and transaction processing segment accounts for 40% of the fintech sector’s top deals in 2018. For example, PayPal’s $2.2 billion all-cash acquisition of Stockholm-based payments provider iZettle and Worldline, agreed to buy the payments unit of Swiss stock market operator, SIX Group, for $2.75 billion.

As for online and electronic payments processing, whilst the transactions were predominantly focused in the U.S market, the largest of these deals was the $442 million sale of First Data’s card processing business in seven European countries to its Italian rival SIA. Other prominent acquirers in 1H2018 include payments processing company, Paysafe Group, which was itself taken over by buyout firms, Blackstone and CVC capital Partners in 2017.

The implementation of Europe’s PSD2, is likely to be a major game changer for the M&A landscape as it will force banks to collaborate and innovate with Fintech providers, as well as encourage pan-European competition and participation in the payments industry, including non-banks. As a result, it is likely to encourage a high-volume of bank and Fintech M&As early next year. Those new to the market will therefore find a more level playing field with harmonised consumer protection and rights, which will encourage new entrants to the financial services market and fuel further M&A deal growth and valuations.

[1] https://www.ampproject.org/case-studies/wompmobile/

[2] 2018 PPRO Group Payment Almanac, Source: Edgar, Dunn and Company

Jumping straight into the top predictions for the security industry in 2019, below Reuven Harrison, CTO at Tufin, provides his thoughts on hacking, cybersecurity, and new technologies this year.

1. The changing face of the firewall

In 2019, we will see new cloud solutions providing security for public cloud coming from the traditional firewall vendors, following up on recent acquisitions of public cloud security companies. This trend is twofold. First, it is a response to the increasing shift of enterprises towards the cloud and their need for security in these environments. Second, the firewall vendors are also realizing the potential of the cloud as a superior platform for software development and big-data analytics.

In 2019, we’ll see the ongoing evolution of next-gen firewalls as they continue to absorb the functionalities of traditional network security solutions to include capabilities such as URL filtering
and other advanced security capabilities.

2. Data Breaches - Don’t speak too soon…or at all

We will see an increase in breaches that use virtual assistants for privilege escalation or distribution of sensitive information. These attacks will manipulate people into inadvertently giving voice commands or playing audio on their computer, prompting a sequence of events that leads to information on company performance or to further gather network information to ease an attack.

3. Kubernetes will become the new data centre operating system

The main factor behind the success of Kubernetes is how it simplifies and speeds up software development and deployment. For example, it enables "immutable infrastructure" which means that instead of deploying incremental changes to update your applications, you create a new version for every change – whether it’s in the application code or in the infrastructure. This concept brings tremendous benefits to the way we develop, deploy and operate applications (and how we secure them).

Another advantage of the microservices architecture is its ability to parallelise development. By decoupling application functions using microservices, large complex development projects can be broken up into smaller, independent teams, speeding up overall development.

In all respects, Kubernetes is driving an IT revolution.

4. The new year brings nothing new

2019 will be the Year of Lessons Not Learned: we’ll see the same security issues and the maturity of technologies that already exist.

In 2018, many organisations undertook their first steps to container security – which translated to vulnerability scanning – getting more data and false positives than they know what to do with and rendering security as a checkbox process. Vulnerable containers will still exist and remain accessible, and organisations can’t take action because they’re inundated with so much data.

Regarding security in the cloud, history is likely to repeat itself, and as the move to the cloud continues, we’ll inevitably see organisations spin up openly accessible servers and data in the cloud. This risk cannot be remediated with traditional security processes that are incompatible with DevOps CI/CD processes.

5. “Automation first” must happen

In 2019, we’ll see more emphasis on security in cloud-native organisations. Many are talking about it; this will be the year that they take action.

To do this, there will be an emphasis on automation. There’s no way that DevOps teams can get security into their environments without automation. To secure cloud-native environments, you must approach it from an automation-first perspective.

6. Hacking the hacker

In 2019, we’ll see cyber turf wars in which hacking groups attack each other to reap the bounty of their adversaries’ resources. Previously established botnets mining cryptocurrency will be targeted over companies with financial data as the ease of exchange and redemption of this decentralised currency is much more readily accomplished.

7. A look back at 2018

Last year, we predicted that automation will reach the tipping point. This came true in the sense that organisations now understand they must adopt automation. What has slowed the process of full adoption is the cultural challenges. In 2019, we’ll see an acceleration of automation across the industry.

According to recent research by IDEX Biometrics, more than half (53%) of cardholders would trust the use of their fingerprint to authenticate payments more than their PIN.

A further 56% of research respondents stated that they would feel more secure conducting purchases with their card, if they were authenticated with their fingerprint. It seems that payment card users are very aware of the limitations of their PIN with almost half (45%) admitting that they never change them. And a third (29%) expressing concerns that PINs cannot be relied on to keep their money secure.

This scepticism around current card security measures also extends to contactless payments with 63% questioning their security and 70% believing that they actually leave them exposed to theft and fraud when used.

It is evident, that as a nation, we are ready for the introduction of biometric fingerprint card authentication. The only area of concern users admitted to, was how their fingerprints would be stored. 45% were worried that criminals could mimic their fingerprint biometric data and a further 51% was concerned about the possibility of it being stored in a bank’s central database - leaving them exposed to identity theft or their personal information being used without their knowledge.

These findings highlight that banks need to provide reassurance that biometric fingerprint authentication can be used in a user-friendly manner. There is no need for this information to be retained centrally and that any fingerprint data is kept with the user on their own cards. Providing customers with the confidence that they can embrace fingerprint biometrics as a more secure and personal method of authentication for their payments.

“Consumers are ready for the use of biometric fingerprint methods of authentication for card payments and it is set to be a reality in 2019, but banks have a responsibility to address security concerns, particularly in relation to how and such data is held. It is ultimately up to the banks and the financial services sector to reassure consumers to drive adoption and ultimately tackle fraud head-on,” comments Dave Orme, SVP at IDEX Biometrics.

“With a resounding 53% of consumers stating they would trust the use of their fingerprint to authenticate payments more than the traditional PIN, this must be where the UK banking industry focuses its attention. Chip and PIN is now 12 years old, and has seen its course. The consumer demand for fingerprint methods of authentication is a reality, with two-thirds (66%) of UK consumers expecting their roll out to authenticate in-store card transactions by 2019,” added Orme.

(Source: IDEX Biometrics)