Here David Orme, SVP at IDEX Biometrics ASA, discusses with Finance Monthly how Gen Z is set to chat the face of modern banking, as well as how banks can address fraud and security challenges and the role of biometrics in combatting fraud.

Consumers in Generation Z (those born after 1995) are the biggest market disrupters right now. They are predicted to make up 40% of all consumers by 2020, and will account for 32% of the global population overtaking millennials (31.5%, born between 1980-1994). As this generation’s spending power grows, they will change the consumer world in many ways.

Now, Generation Z looks set to transform the face of modern banking too. Our recent research into Generation Z’s attitudes towards banking and online security and biometrics found that nearly eight-in-ten (79%) 16-24-year olds think banks should do more to protect their customers from fraud.

Additionally, the youngest consumers in our study were 16-17-year olds, the target age for many new banking customers. Of this age group, a huge 95% think banks should be increasing fraud protection for their customers.

Why is Generation Z so concerned about fraud?

Having grown up around the threat of cybercrime, those in Generation Z are more aware of the risks of fraud than the more security-lax millennials (born between 1981 and 1994). Our research found that nearly three-quarters (74%) of 16-24-year olds believe it is too easy to find someone’s personal information online nowadays. Also, more than half (52%) of Generation Z are worried about someone stealing their identity.

I recently observed a focus group of 18-24-year olds to support our research and noticed a high level of awareness about banking and online security from the respondents. Interestingly, many of the young consumers showed they don’t just jump to install the latest banking apps simply because they are new or cool. They are thoughtful with their consumer decisions and assess how well services or technologies fit their security and financial needs first.

One respondent, Nikki, who is 24 and from London, stood out for rejecting mobile payment apps, the opposite of the perceived image of someone in Gen Z: “I only use my bank card to pay for things,” she said. “I deliberately keep my phone separate because I don’t want spending money to be too convenient.”

The security challenge

Like Nikki, many Generation Z consumers are more cautious while banking or shopping than retailers and banks often believe. The research shows that, far from being over-sharers of their personal information, more than three-quarters (76%) of Generation Z accept that it’s their responsibility to look after their data and keep their identity safe. In return, these consumers expect their banks and service providers to work just as hard to deliver a high level of protection for them.

Although new challenger banks, such as Monzo and Starling, are growing rapidly among young consumers, that doesn’t mean Generation Z trust them more when it comes to security than the high street giants. Michael, a 19-year-old student from London also in the focus group, summed up the care with which Generation Z approach digital banks: “I feel the online banks have to push up their security because there’s no physical presence,” he said. “So they’ve got to be more secure to be on top of their game.”

Although new challenger banks, such as Monzo and Starling, are growing rapidly among young consumers, that doesn’t mean Generation Z trust them more when it comes to security than the high street giants.

Our study also reveals a wider lack of confidence in all banks, as only half of Generation Z shoppers (54%) are certain that their bank would refund them any losses if someone fraudulently accessed their bank account and stole any amount of money. The new generation of banking customers expect greater security and responsibility from high street banks, which in turn is driving their consumer choices.

The biometric banking solution

The findings also show that Generation Z wants to see banks adopting new technology to combat card and online fraud. Nearly two-thirds of them (62%) think all banks should offer biometric payment cards to help reduce fraud.

Additionally, nearly half (45%) of Generation Z can’t believe credit and debit cards don’t already use biometrics for payment and ID security. Again, this is even higher among 16-17-year olds, with nearly two-thirds (63%) of them expecting banks to already use biometrics for payment card security. As high street banks often thrive on signing-up new customers while they are young, appealing to this new generation of consumers is vital for the industry.

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Therefore, financial institutions must now add biometric technology to the payment card market to attract young and potentially loyal customers. In fact, nearly half of those in Generation Z (46%) would choose a bank that offered biometric payment cards over one that didn’t.

Most importantly, Generation Z consumers are willing to pay for added security as two-in-five (43%) would expect to pay a little more for a biometric payment card, with a third (33%) willing to pay between £3-5 per month for it.

Banks need to act now

While many traditional banks have been slow to respond to the needs of Generation Z customers, it’s important for the success and future of the financial industry that they don’t ignore the demands of this generation of customers any longer. Unless high street banks act now to address the security concerns of those in Generation Z, they’ll soon be overtaken by fintechs and digital challengers who can innovate faster.

It is apparent under 24s expect to be using new, secure biometric technology today for increased payment security and convenience. Banks must now introduce innovative biometric payment cards to attract young customers, protect users from fraud and build trust with the consumers of tomorrow.

Philip Hammond says that the UK fintech industry is currently worth £7 billion, employing more than 60,000 people. These massive, tech-driven disruptions are proof that fintech has finally emerged as a mainstream industry. Not only that, but these changes have also created numerous new trends that will benefit both businesses and consumers. Here are some to watch out for this year that will affect the financial industry:

Voice technology will grow in banking

Consumers can already operate a handful of things by voice, including music, TV, GPS, and even home security. Currently, banking is slowly catching up in order to improve customer service and prevent fraud. HSBC have reportedly saved £300 million in fraud through voice biometrics. Customers repeat a phrase after giving the bank their details over the phone in order to provide an extra level of security. Expect more banks to follow suit this year and for voice biometrics to become even more widely used.

Faster payment processing

Bloomberg reports that customers can expect banks to speed up checkout lines through a wider adoption of contactless cards. Payment Relationship Management CEO Peter Gordon said large banks do not want to be displaced so they’ll do what they can to be more efficient. In Singapore, they opened their first real-time and round-the-clock payment system called FAST. Singapore Minister for Education Ong Ye Kung talked about it at the launch of SGQR, Singapore’s single and standardised QR code for e-payment. "We will allow non-bank players to have direct access to FAST. This is to enable their e-wallets to bring greater convenience to consumers," he said. Expect e-wallets to become more widely used this year.

Blockchain-powered freelance market

The global recession along with the advancements in technology has led businesses to embrace alternative work arrangements particularly for freelancing, which is becoming increasing popular in the finance industry. In fact, the world’s first blockchain-powered freelance market has already been launched in the UK. The Fintech Times highlights how the marketplace gives employers instant access to a talent pool of freelancers. Work and skills are continuously validated and recorded, and the platform allows freelancers to create smart contracts, which ensures they get paid on time. This brings transparency and fairness to the gig economy. And Yoss explains how the current state of freelance recruitment now includes “highly rigorous skills validation and qualification tests,” as the demand for specialists in areas such as AI increases. The blockchain platform will allow companies to find freelancers based on the quality of their work rather than the quantity, which will benefit both businesses and those looking for jobs.

Alternative Finance for SMEs

Resesarch by American Express found that 30% of SMEs find it difficult to access the finance they need, despite the fact that 68% think cash flow is important to their business. In the UK an increasing number of SMEs are moving away from traditional financial avenues like bank loans. This has led to a 13% increase in the use of peer-to-peer lending in the past 12-months. Peer-to-peer collaboration is a much more streamlined way for SMEs to access financial support. For instance, micro-lenders mainly operate online, which helps reduce overhead costs and takes out the middleman.

Chatbots and robots

Apart from speeding up transaction times, fintech is also revolutionising customer service through chatbots and AI. Today’s chatbots are already able to not only understand what the customer needs but also the entire context of the conversation. This will help reduce the amount of time customers spend waiting for answers or on being hold. The technology will also mean that banking apps will become the primary form of communication between customers and their banks in the future. This will reduce costs and allow for a more streamlined service.

The finance industry is not only opening doors to faster transactions and better customer service, but it’s also creating more opportunities to work in a fast-evolving and lucrative industry. Chris Renardson points out that if anyone wants to make it in the industry, it takes more than technical and numerical know-how. So follow the above trends to stay ahead of the competition.

In an economy that produces somewhere in the region of $80 trillion of gross domestic product a year, oil and gas drilling make up somewhere between 2% and 3% of the global economy.

Technologies thought unthinkable only a few years ago have revolutionised the way business go about finding their resources and the attitudes to the future of the oil business.

Here, we look at some of the trends and challenges currently circulating in the industry.

The Trends

The ‘Smart-Oilfield’

The oil industry is currently enjoying significant investment to create digitalised oilfields that offer integrated data communication across wellheads, pipelines and mechanical systems.

This collective data produces real-time analytics for data centres that can regulate oil-flows to optimise production.

Experts believe this extra intelligence has the potential to increase the net value of oil and gas assets by an eye-watering 25%.

Technology Striking Rich

Within the last decade, worry around the quantity of oil left remaining dominated the industry. Thanks to the technological advances of the last five or so years, oil companies have discovered resources so significant that these once very real concerns are now a distant memory.

4D seismic technology has created huge benefits in reservoir monitoring and is now used universally to maximise return on investment.

The development of the Subsea oilfields has reduced both infrastructure and production costs, with deeper exploration providing greater profits and risks in equal measure.

While controversial in its application, fracking of shale basins has taken US crude oil output to its highest peak since 1989, and overseas developments are in process and set to have a significant impact on the industry.

Finally, advances in oil recovery technology offer the potential to make enormous efficiency improvements. As it stands, only around one third of oil is recovered in drilling processes, meaning there are huge financial gains to be had through improving the infrastructure.

Even with some of these processes still in their infancy, the tech-revolution is offering the potential for unfathomable gains.

The Challenges

The Competition for Talent

As with any industry, the competition for top talent is fierce, but with an aging and shrinking talent pool, the oil industry’s big guns are having to invest more than ever into attracting the best people to their business.

Adding to the above trends, this means the oil industry is a good one to be in, with notable increases in base salaries alongside additional incentives and perks in recent years.

However, with specialised experience lying predominantly with the older age groups, oil companies face a key challenge in recruiting and training the next generation, not to mention matching the staffing demands of a starved sector.

The Obituary of Oil?

Despite new found and untapped resources, there are several challenges facing the oil industry that collectively pose the question: is the end of the industry nigh?

With an ever-growing market in sustainable energy, continuing price volatility and inflationary costs on wages and raw materials, oil companies face serious challenges in remaining competitively priced and diversifying their services to keep going in fluctuating market.

Even with the rise of green technologies like the electric car market, fossil fuels still have a major part to play in the next few decades of global industry. It is, however, simply a case of proving that to investors who have an eye on the future.

Constant turmoil surrounding Brexit, Trump and populist movements across the world make for a very volatile trading landscape.

Here are Samuel Leach’s top trends and events that will cause currency fluctuations in 2019.

Brexit

No Deal 

Parliament is saying that there’s no chance of a no-deal Brexit; however, May's deal has little hope of being passed in parliament.

This is causing huge uncertainty in the market and we could see GBP fall against its pairs along with weakness in FTSE. Evidence to the current uncertainty has been strengthened by the government emergency testing at Dover. A pile-up of lorries would be expected at customs if no deal is the outcome. There are stocks that could benefit from a weak pound due to most of its income coming from exports.

Deal

Although this is increasingly unlikely, if a deal is passed, I would expect the pound to strengthen against its pairs due to more certainty in the market. All indices have been in a bear market in the final quarter of 2018, so predicting the FTSE to go against the trend of its peers is unlikely. If we see other indices turn bullish there is no doubt that FTSE will follow.

Second Referendum

May reiterates that under no circumstance is this an option, however, it must be contemplated. If this does occur, a pop in GBP will be expected in the short term, and only when a result is concluded would a long-term trend be evaluated. If the public voted to leave again, we could see GBP/USD back to its low of 1.1/1.2. On the other hand, if the UK were to stay in the EU, there is no reason GBP/USD won't return to its pre-referendum price of 1.4.

If China does start to go into a recession as many expect, this is likely to travel around the world and other economies will follow.

US/China Trade relations

The US Dollar has been strong throughout 2018, however during the last few months of the year, we saw it starting to weaken. Bad trade relations have started to put pressure on both economies, with tariffs of up to 40% on exports like Soybeans from some US exporters, which has led to farmers becoming reliant on a $12billion bailout.

Even Apple has blamed its recent slowdown in iPhone sales on a weak Chinese economy. If China does start to go into a recession as many expect, this is likely to travel around the world and other economies will follow. China’s central bank has even cut the amount of cash it requires banks to hold in reserve for the 5th time in a year which has freed up $116biliion in cash for lending.

How this effects the dollar against the Yuan depends on which economy has the upper hand if more tariffs are implemented once the trade deal deadline passes. Trump has already increased import tax of $200billion on Chinese imports and is threatening with another $300billion, which would be crippling for the Chinese economy. In this case, I would expect to see the Yuan fall.

The Chinese government has made a statement saying it won't let the Yuan sustainably fall below 7 against the dollar. Many analysts suggest that the government has plenty of ways of stopping the Yuan from depreciating, and as The People’s Bank of China has successfully intervened in the past, there is no reason for them not to do it again if things were to worsen.

We should all be watching US interest rate hikes very closely over the next year.

Emerging economies to watch

Many analysts believe Indonesia is expected to be a leader in the emerging market within 2019. The country has low inflation compared to other emerging markets with high stability. Most analysts don’t see this trend slowing down in the region. If the US becomes more dovish with its rate hikes, this is expected to be beneficial to emerging markets and give a boost to emerging economies.

The area experienced a slight slowdown towards the end of 2018, which prompted the Bank of Indonesia to raise interest rates by 125 basis points since May and intervene in both the currency and bond market in the attempt to curb any losses. However, this economy is in a good place to benefit from any bounce in global economies.

US Interest rates

We should all be watching US interest rate hikes very closely over the next year, as this has a strong correlation to all US indices and the dollar index. The Fed is looking to be more dovish on its interest rates, however, two hikes are expected in 2019.

2019 will be characterised by uncertainty, and several geopolitical events will impact the foreign exchange markets. As with every form of trading, keeping on top of political events will be key for FX traders; the above are particular areas to stay on top of.

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.

Here Stan Swearingen, CEO of IDEX Biometrics, discusses the potential trends for 2019’s biometrics sector.

Following a number of successful trials using fingerprint sensor technology within smart cards across multiple markets, (including Bulgaria, the US, Mexico, Cyprus, Japan, the Middle East and South Africa) the biometric smart card is reaching its inflection point. Key players within the banking industry, including Visa and Mastercard, are already heavily invested in this new payment technology and anticipate that biometrics will play a key role in the revolution of the payments industry.

With mass market rollout on the horizon, here are five key predictions for the biometric payment industry in 2019.

2019: The year of dual interface

The first half of 2017 reported 937,518 cases of financial fraud, resulting in losses of an astonishing £366.4 million^[1], a clear demonstration that the PIN is no longer fit for purpose. Recent research from IDEX Biometrics supports this claim and found that 29% of consumers surveyed felt concerned about the use of PINs to keep their money secure, and as many as 70% believed that contactless payment cards left them exposed to theft and fraud. As consumer concerns continue to grow around the security of payments, so too does the need for a personalised, secure and convenient payment solution.

Enter the biometric dual interface payment card. 2019 will see biometric fingerprint sensors integrated into cards with both a micro-processor and contactless interface, removing the need for PINs. This will provide consumers with the reassurance that their money is safe as any transactions will require their finger print to authenticate it. 2019 will be the year of the dual interface where biometric authentication will be available for both contact and contactless payments!

These advances in technology and those within the payments market have meant that the concept of biometric authenticated payments is no longer a novelty. In fact, according to forecasts by Goode Intelligence, nearly 579 million biometric payment cards will be used globally by 2023^[2]. The integration of the biometric sensors in the payment card will be one of the next-generation transformative innovations to breathe new life into the payment industry next year and assist in the fight against payment fraud.

The integration of the biometric sensors in the payment card will be one of the next-generation transformative innovations to breathe new life into the payment industry next year and assist in the fight against payment fraud.

Remote enrolment will be the key to mass market adoption

For mass market deployment of biometric smart payment cards to be possible in 2019, banking infrastructures must look at the implementation of biometric technology and ensure that this method of enrolment is accessible and convenient to all. The elderly or those with physical health limitations may struggle leaving the house to enrol within bank branches and even those who work a 9-5 day can often find making it to the bank within opening hours a challenge.

The latest advancements in remote enrolment of biometric payment cards will mean that enrolment for biometric payment cards can take place in the comfort of your own home. Card users will be able to enrol straight onto the card by simply placing their finger on the sensor (with the aid of a small device that comes with the card) to upload their print to the card’s highly secure EMV chip. There is no need for an external computer, smartphone or internet connection. Once loaded, the fingerprint never leaves the card, thus eliminating multiple attack points.

Biometric payments will bridge the gap to financial inclusion

In 2019 advances in biometric fingerprint authentication will be a vital ingredient when bridging the gap to financial inclusion. Currently, 1.7 billion adults remain unbanked across the globe today^[3]. This is for many reasons, from immigration issues, to illiteracy as well as mental health. Those living with dementia are also at risk of losing their financial independence as their short-term memories decline. A fingerprint sensor on the card can take the place of a PIN or even signature, meaning sufferers are able to stay financially independent for longer.

Currently those who lack access to financial services are missing out on the many benefits financial inclusion has to offer. Fingerprint authentication will remove the barriers that face those with literacy challenges, or face difficulty with memory, as card payments will no longer be about what you know, or what you can remember, but who you are.

Currently those who lack access to financial services are missing out on the many benefits financial inclusion has to offer.

Biometric authentication will be a simple, secure and convenient solution eradicating the need for passwords and PINs as a form of authentication. For this to work as a solution to financial inclusion, banking infrastructures and card manufacturers must work together to reach a price point that enables this technology to be available to all.

The possibilities for biometrics are endless…

While biometric authentication technology is already being used with smartphones and passport identification in the UK, 2019 and beyond will see endless possibilities for the use of biometric smart cards into payments and beyond. We can even expect to see biometrics branch into the Government issued identification and IoT enabled devices arenas.

In fact, a whole host of public services is set to benefit from this secure means of authentication. The use of biometric smart cards within the NHS, for example, could see access to sensitive patient records limited only to the patient themselves. Biometric social benefits cards could control how the money is spent and that it is spent by the right person. According to IDEX research, 38% of consumers surveyed would like to see biometric methods of authentication introduced to wider government identification including driving licenses, National Insurance numbers and even passports.

The future of the biometrics – 2019 and beyond!

In 2019, authentication will get even smarter, and further technological advances such as multi-modal or multi-factor authentication will further enhance security within the payments landscape. This refers to technology that combines a variety of different types of biometrics in order to add an additional layer of security, including persistent authentication. For example, instead of having one single authentication, smartphones could continuously scan features to ensure the correct person is using the device.

Whilst the biometric dual interface smart payment card is set to hit the mass market next year – this is just the beginning. The payment card of tomorrow will go beyond just transactions. Biometric smart cards will serve multiple purposes – a payment card, a form of ID for restricted goods and even a loyalty card!

The early days of biometrics where it was felt to be invasive and a privacy concern are long gone. In fact, according to recent research from IDEX, 56% of consumers surveyed state they would trust the use of their fingerprint to authenticate payments more than the traditional PIN. Further to this, 52% would feel more confident if their fingerprint biometric data was stored on their payment card, rather than a bank’s central database.

Consumers are ready for the use of biometric fingerprint methods of authentication for card payments and 66% expect their roll out to authenticate in-store transactions in 2019. We predict that by 2019 biometric smart payment card adoption will go into many millions!

[1] https://www.financialfraudaction.org.uk/news/2017/09/28/latest-industry-data-shows-fall-in-financial-fraud/

[3] https://globalfindex.worldbank.org/

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

S&P Global Ratings said that its top 50 rated European banks turned a corner last year, a decade after the start of the financial crisis, and are likely to continue down this brighter path in 2018, according to the report, ‘The Top Trends Shaping Major European Banks In 2018’.

Idiosyncratic developments aside, there was clear forward momentum, culminating in a raft of positive rating actions (outlook changes and upgrades) across a number of European banking systems in the third and fourth quarters.

"These actions reflected principally our view of improving economic risks, helped by massive monetary stimulus from central banks, and supportive industry risks, notwithstanding the emergence of fundamental long-term business model challenges," said S&P Global Ratings credit analyst Giles Edwards.

Elsewhere, for example in Sweden and Germany, our concern about looming asset bubbles receded somewhat. What's more, for a few banks, we recognized a strengthening in their balance sheets, typically improving capitalization or a growing bail-in buffer.

We start 2018 with no fewer than 15 of the top 50 European banks carrying a positive outlook and only three with negative outlooks on the issuer credit ratings (ICRs), suggesting that this should be another year of generally positive ratings developments.

Under this supportive base case, here are trends we expect to play out in 2018:

"However, European banks' progress in areas like NPA reduction and debt issuance and the emerging improvement in economic activity could yet be undone if political risks rise or market conditions deteriorate significantly," Mr. Edwards said.

Furthermore, we continue to monitor the long-term challenges that European banks face:

(Source: S&P Global Ratings)

From IoT to peer-to-peer offerings, the PPRO Group - specialists in cross-border electronic payments - have predicted key online payment trends for the year ahead. With digitisation in the world of payments progressing by leaps and bounds, the following seven developments are expected to make waves in 2018.

1. Internet of Payments

According to Gartner, the number of devices connected to the Internet of Things (IoT) is set to increase from 6.4 billion in 2016 to 20.8 billion in 2020. Consumers are increasingly expecting their IoT devices to enable more than just carrying out tasks automatically; they also expect them to facilitate payments. For example, consumers with connected fridges can expect to see depleated items restocked and automatically paid for. Visa is also working with Honda to develop technology that can detect when a car’s petrol is low and enables users to pay for a refill using an app that is connected to the in-car display.

2. Context-Based Payments

Anyone heading to the checkout, whether with a real or virtual shopping basket, often takes a moment to decide whether their purchase is really worth it. Integrating payment into the context of the shopping experience and transaction can help remove this barrier to sale. It renders the POS almost invisible, while the payment process runs automatically in the background of a shopping app being used.

Wireless payments – a concept already being implemented more frequently online – will also be used in brick and mortar stores. Customers will, in the future, no longer need to reach for their cash or a credit card; instead, they can pay wirelessly in passing – whether from their smartphone via Bluetooth, using the RFID chip in their debit card, or automatically by facial or voice recognition. This will make the transaction seamless, and leave little time for consumers to rethink their purchase.

3. Peer-to-Peer Payments

In 2018 payment processes will be increasingly integrated into peer-to-peer (P2P) systems. In India, for example, WhatsApp users can already use P2P payments to send money to friends during online chats. Apple is also implementing this feature with Apple Pay Cash. The new voice input technologies, such as Alexa, Siri and Cortana, mean that P2P payments and banking transactions can also be carried out using voice commands.

4. Real-Time Payments

The push pay model makes real-time payments possible. Thanks to the SEPA Instant Credit Transfer (SCT Inst) scheme, the requisite European infrastructure has been in place since 21^st November 2017. In Germany, it is already supported by the UniCredit Bank, the Deutsche Kredit Bank, and many savings banks. But it will probably be some time before the majority of banks are using the new system – perhaps not until participation becomes mandatory.

In 2018, however, additional German participants are expected to join the scheme as market pressure increases. It will be interesting to see the extent to which SCT Inst will open up new payment methods and how much retailers, in particular, will take advantage of the speed and reliability of real-time transfers to convert their processes to genuine real-time transactions.

5. Partnership between Banks and Fintechs

The technical specifications (Regulatory Technical Standards, RTS) defined by the European Commission for the new Payment Service Directive, PSD2, represent a major compromise between the interests of the established banking industry and the European FinTechs.

From the FinTech point of view, it would have been better to offer them the same as banks, and a free choice of using APIs or access via online banking. This would have resulted in good APIs being used while poor ones were ignored, creating a kind of self-regulation. At least, however, the new version is less of a threat to the European FinTech sector than the original version issued by the EBA at the end of February 2017. This is expected to result in a solid foundation which will foster increased competition and security in payment processes, which will provide both retailers and consumers with more choice and information monitoring.

6. Decentralisation through Blockchain Technologies

The technological basis for Bitcoin and other cryptocurrencies will facilitate the creation of more innovative financial solutions in 2018. Institutions will use blockchain technology to establish direct connections, thus eliminating the need for intermediary or correspondence banks.

Nasdaq has already created a platform which allows private companies to issue and trade shares via blockchain. Here, the complete trading process – from execution to clearing to settlement – takes place almost in real-time, while the technology allows traceability. Blockchain can also be used by regulators as a completely transparent and accessible recording system, thus making auditing and financial reporting considerably more efficient. The number of uses for blockchain is constantly increasing and, although the technology has not yet actually achieved breakthrough status, like many radical technological shifts, it needs time to establish itself.

7. Commercialisation of MNO Wallets

More than two billion people globally currently do not have access to financial services. In many countries with low financial inclusion, peer-to peer-payments through mobile wallets or mobile network operator wallets (MNO wallets) are the norm. With growing popularity of e-commerce in these countries comes the commercialisation of such wallets for B2C payment methods. There is a clear shift from P2P payments to B2C payments seen in many Asian, African and Latin American countries.

(Source: PPRO Group)

Without a doubt, 2017 has been a rocky year for financial services; with political upheavals, economic uncertainty and planning for numerous regulatory changes coming into effect in 2018.

In 2017, Brexit was the talk of the town, with “uncertainty” a word bouncing around the finance sector. As such, the key focus was on the financial services industry crafting their post-Brexit strategy, namely how to continue having access to both EU and UK markets and in turn catering to their clients’ needs.

According to Brickendon, while political events will continue impacting financial services, including Brexit negotiations, next year digitalisation and data will dominate alongside Robotic Process Automation and Blockchain, making larger waves in the sector and paving the way for uncapped growth and innovation.

1. A Data Future. Access to it, and the ability to mine data, will be central to everything that happens in the future of financial services. Now that the data is loaded, and the toolsets are understood and available, 2018 will see it being used for operations and technology processes.
2. The Rise of Robots. Robotic Process Automation (RPA), which uses software robots or ‘bots’ to mimic human activity, has the potential to unlock yet more value by freeing up employees to focus on value-added work – ultimately transforming the way the financial services sector operates. In 2018, we will see how this will impact RegTech, data analytics and ultimately how organisations service their clients. A gamechanger for the industry will be the start of the processes to replace people with robotics and machine learning.
3. The Reality of Blockchain. The use of the distributed ledger technology will no longer be just hypothetical. The opportunities for financial services who invest in such technology are endless from reducing operational costs to improving efficiency.
4. Simplifying Digitalisation. Business is becoming more about the user experience. Automated user interfaces can go a long way to helping this and embracing digitalisation is key in making it happen. The upcoming year will be all about the simplification of processes and digitalisation.
5. The Changing Political Climate. Brexit will remain a buzzword and continue to make headlines. As more details of the UK’s departure from the EU become clear, we will see banks and institutions adapting accordingly. Many will have to keep a close eye on their strategy if they are to survive and thrive in 2018.
6. Banking Regulations. 2018 will be a turning point for financial regulation. Alongside General Data Protection Regulation (GDPR) and Markets in Financial Instruments Directive (MiFID II), the requirements for central clearing and the second Payments Services Directive (PSD2) will force significant changes to the banking environment, with the innovators and disrupters emerging as the winners.
7. FinTech Collaboration. One of the largest technology shakeups in banking in recent years has been the use of advanced data analytics techniques to catch rogue trading activities within banks. In 2018, banks will have to decide whether to service clients in house or through a third party to stay competitive.

(Source: Brickendon)

Deloitte explores the rapid evolution of business technology in its eighth annual technology report, "Tech Trends 2017: The Kinetic Enterprise." Released last week, the report describes how companies presently must sift through the promotional noise and hyperbole surrounding emerging technologies to find those solutions offering real potential. To realize that potential, they should become "kinetic" organizations — companies with the dexterity and vision required to thrive amid ongoing technology-fueled disruption.

Tech Trends 2017 examines seven key trends that will likely revolutionize enterprise technology in the next 18 to 24 months. Among the trends discussed are machine intelligence, dark analytics and mixed reality, which is a blend of augmented reality, Internet-of-Things and virtual reality. The report also covers innovations in analytics, digital and cloud that are transforming the way organizations engage with customers and citizens; and reimagine products, services and business models.

"Kinetic enterprises are fluid and their leaders understand that to remain relevant, they will need to develop a deliberate innovation response to these disruptive forces," said Bill Briggs, chief technology officer and managing director, Deloitte Consulting LLP. "It's not about chasing every shiny new object; it's about translating the raw potential of emerging technology into a focused set of priorities with measurable, tangible business impact."

According to the report, some of the key trends that will transform the business landscape in 2017 and beyond include:

• Dark Analytics: Advances in computer vision and pattern recognition allow companies to plumb the recesses of unstructured data, which may include images, audio, video and information residing in the "deep web." These tools can unlock powerful strategic and operational insights for businesses in the next level of technology-driven enlightenment.
• Everything-as-a-Service: Services-based ecosystems are becoming increasingly common in business. This model requires open and agile systems, which could provide a business rationale for modernizing legacy core systems. From next-generation ERP to "replatforming" custom back-office applications, everything-as-a-service (XaaS) can help information technology achieve greater efficiencies and lay a foundation for business innovation and growth.
• Machine Intelligence: Artificial intelligence and machine learning are doing more than providing insights and recommendations. Increasingly they are augmenting and automating more complex, mission-critical tasks. This continuum covers cognitive and predictive analytics, bots and robotics process automation — related but distinct disciplines delivering on the broader promise of machine intelligence.

"This goes beyond the CIOs and IT department. There are factors changing every element of business," said Briggs. "Machine intelligence, blockchain and other technologies will have huge implications for talent, operations, and for the enterprise as a whole. Developing a strategy for prioritizing investments and harnessing these emerging technologies has become a boardroom directive."

The report's "Exponentials" chapter identifies four key areas blending science and applied technologies — nanotechnology, advanced energy storage, synthetic biology and quantum computing. Business leaders across industries should be aware of the looming potential these technological advances hold and begin exploring ways to harness exponentials within their organizations.

In addition, each chapter features a "Cyber Implications" section, which helps CIOs balance potential with responsibility around security, privacy and compliance. For the kinetic enterprise, striking this balance is necessity, and reflects a shift toward viewing risk strategically as a core discipline. The report also includes case studies, perspectives from industry luminaries, and experience from Deloitte practitioners that crosses government, business and society.

(Source: Deloitte)

2016 was an unprecedented year, with massive global political upheaval, the rise of Artificial Intelligence (AI), and centre stage being taken by issues such as ‘post-truth’, resurgent nationalism, and technological unemployment. These social, technological and political shifts have significant potential ramifications for all aspects of global finance, commerce and markets. Hence, with the world now more accustomed to such seismic agenda changing developments, the Fast Future Publishing team have turned our thoughts to the future and dipped into our recent book The Future of Business and our upcoming release The Future of AI in Business to suggest what might happen in the year ahead. Below we provide our 2017 year-end report, outlining 20 critical trends and scenarios we could see emerging, and highlight their potential impact on economic and financial markets.
Politics, Government and Regulation

1. The Presidency as a Business Model – Following his inauguration in January 2017, President Donald Trump rides roughshod over accepted norms of presidential behaviour. After his first year in office, analysts suggest that he could easily exceed President Putin’s estimated net worth of US$200Bn by the end of his first term, and could ultimately become the world’s first trillionaire. In this rapidly changing reality, businesses must become very aware of the new commercial opportunities that are opening up as a result of the president’s strategy. Equally vital will be to see where opportunities may disappear – a key example being the US car industry which is being strongly discouraged from investing overseas.
2. Who Needs a Constitution? – While opponents desperately seek a mandate for his impeachment, Trump’s team, his supporters and the major beneficiaries of his reign seek to extend the powers of the President. They also pursue the removal of limits on the duration of the US presidency and the number of times an individual can hold the office. This endemic uncertainty around the presidency could inspire volatility in financial and currency markets.
3. Brexit Brouhaha - Despite invoking Article 50 in the spring, the UK government is blocked at every turn by a string of legal challenges that hamper progress. The 'UK question' hyperbole was increasingly used by both sides in several national debates – from garnering support by claiming to represent the political will of the UK electorate on the one side to scaremongering on the risk to the UK economy and the European project on the other. This could lead to a number of companies wanting to exit the UK. However some of the incentives created around the future of Britain could encourage investment in the country – particularly the tax haven strategy.
4. May Day - Exasperated by the Brexit roadblocks and under pressure from many in her own party, Prime Minister Theresa May announces a general election for October 2017 to let the public decide if they want her Brexit plan. The result is a hung parliament, with UKIP the biggest single party and Nigel Farage leading the next coalition government. This dramatic political over-haul could lead to chaos in financial markets, initiate an exodus of foreign firms and talent, drive a reduction in corporate investment, and induce huge hesitancy in individual spending behaviour.
5. Wildcard Wagers - The tumultuous events of 2016 sparked a rise in public event betting markets, with 2017 becoming the year of the wildcard wager. Betting shops saw an incredible rise in bets being placed on all manner of events from animals escaping zoos to the sudden collapse of buildings. A new breed of AI-based betting companies emerged which even allowed us to bet on the life expectancy of an individual. These companies draw on social media and ‘permissioned access’ to personal data to determine your life expectancy. Those that give permission for personal their data to be accessed by the betting companies can then share in the proceeds of the bets on their life. While the market might be created by relatively new players, existing betting companies might also see it as a lucrative new opportunity.
6. Will They or Won't They - While regulators were called upon to question the ethics of betting on life or death scenarios, advocates saw the potential for public engagement through such betting, and single interest political groups arose around the potential outcomes of specific events. Online political networks surrounding betting events were created by disparate groups; with individuals identifying as will-happen or won't-happen. This saw sudden huge surges of political activity and engagement, which dropped off drastically after each such event. These new revenue generation opportunities might well be short lived if governments seek to control them. But there is an interesting new technological application; we might see AI being used here to dynamically create, operate and close these markets based around short term events.

Technology and Privacy

7. Artificial Intelligence – Following the hype phase of 2016, real applications started to emerge in 2017 – such as intelligent assistants on our smart phones and medical decision support tools. Cash-strapped governments turned to AI for the automation of a range of functions from processing student loan applications to handling divorce adjudications. The impact of AI could see businesses deliver a dramatic reduction in operating costs and exponential revenue growth.
8. Driving Ambition – In a bid to become a key centre of innovation and sector development in driverless vehicles, China and the UK led the way in allowing on road trials of driverless vehicles. Both governments accelerated the process of regulatory change to allow fully or semi-autonomous cars, trucks and buses onto roads across their nations in 2018. One of the most interesting early market impacts of this development could be the early arrival of very low cost upgrade kits that let us add autonomous features to our vehicles
9. Self-Powering Nations – Faced with continued uncertainty over the price, availability and environmental impact of fossil fuels, 2017 saw a record number of nations powering themselves with renewable energy for at least part of the year. We could see a significant reduction in overall energy production and distribution costs. This could bring a benefit to the consumer whilst also reducing long term environmental impacts and clean-up costs.
10. Leave me Alone – 2017 saw a dramatic increase in the availability and adoption of Blockchain technology-based personal privacy management applications. By year-end these are increasingly used by individuals to secure their own communications and information storage to avoid sharing data with massive corporations such as Facebook and Google. Brand new business opportunities could emerge for providers that can offer these cutting edge privacy protection services.

The Economy and Business

11. Corporate Flight – Uncertainty over Brexit leads several major companies to announce that they are moving their headquarters, R&D functions and core operations to Dublin, Amsterdam, and Frankfurt. The exodus is well underway by year end. If large high earning corporations leave en masse, there will be a dramatic impact on projections for long term GDP growth and potentially violent fluctuations in share prices.
12. Wealth Haven Britain - Taxes are so 1990’s – to help cushion the expected economic impact of Brexit, the UK government tries to retain and attract foreign investment and wealth. The key pillars of the strategy are the introduction of the lowest corporation taxes in the G20, with massive increases in tax allowances for both R&D and establishment of local production facilities. In parallel, a range of personal taxation measures are introduced that make Britain look highly attractive when compared to the best of the offshore tax havens. Britain will face huge opposition from other countries if it chooses to undercut them with its tax regime. However, this could also see rapid acceleration of foreign investment and the arrival of private foreign wealth.
13. Masters of the Universe - The major technology players such as Google, Baidu, IBM and Amazon continued to pull away from the pack with ever-more sophisticated technology applications. These range from super intelligent ‘brain in the cloud’ solutions to extract insight from the wealth of data being created by the Internet of Things, to smart assistants managing our daily lives and instantaneous translators covering over 50 languages. These new hyper-personalised services could accelerate revenue growth and boost share prices.14. Digital Dementia – In 2017, the corporate sector and many governments continued to adopt a somewhat cautious approach to the use of disruptive technologies such as blockchain and AI. Those who are pursuing expensive digital transformation projects began to see that their initiatives are eliminating the distinguishing human element and effectively commodifying everything they do - as digital differentiation is impossible to maintain. Stock markets began to write down the value of firms that appear to have got lost in this digital maze – whilst advocating those that appear to be using the technology to support talent rather than replace it.

15. Parallel Worlds – A parallel universe of new economy businesses emerges here on Earth. Digital era mindset firms proliferate – trading with each other using Blockchain contract systems, transacting in digital currencies, deploying AI for core activities, and – in some cases – creating entirely digital Decentralised Autonomous Organisations with no physical employees. In the face of broader uncertainty over the future of mainstream businesses, we could see a significant amount of corporate investment and venture capital money flowing to such businesses.

16. The New Professionals - A raft of AI client advisor applications are launched by the major legal, accounting and consulting firms – automating tasks previously performed by professionals and driving a reduction in headcount. This may induce a reduction in the pricing of services from these firms – but could simultaneously drive significant growth in revenue as they can offer these services to more clients in parallel without having to increase headcount.

Social and Leisure

17. Technological Unemployment – The use of new smart technologies, coupled with increasing automation and the termination of ‘non-viable’ activities by large businesses, sees unemployment rising across a range of sectors in countries around the world. This could have a dual impact – both on the level of debt in society and average incomes.
18. The Crumbling Middle – Stalling growth, technological unemployment, The Trump effect, Brexit uncertainty, and general cost cutting bites hardest in the educated middle classes in professional and managerial roles across the developed world. The impact is felt in areas as diverse as theatre attendance and private school enrolments through to the purchase of new cars and holidays.
19. Virtual Immortality - Holographic versions of David Bowie and Prince go on tour. A student team were able to generate new stage performances for these and other artists using previously unreleased tracks and composite digital imagery. A crowdfunded campaign raised enough money from fans to finance a global tour for Bowie and Prince. Holograms of the stars toured the planet, occasionally doing duet gigs together. The use of Virtual Reality and Augmented Reality allows for viewers to purchase VIP and Platinum VIP passes that put them in the front row on even on stage for the performances. These brand new markets will create new pricing opportunities – could these holographic experienced be priced similar to an original stadium concert, or would they be more aligned with the cost of attending the cinema.
20. Robo-Retail -The traditional shopping model was subverted as the Amazon Go concept store was rolled out across the US. Using smart phone technology, item tracking and mobile payment methods, shoppers simply pick up their desired items and leave - the purchases being automatically logged and their accounts debited. The stores saw roaring trade, with customers spending much higher amounts than they normally would, with Amazon’s more traditional competitors forced into a near permanent ‘black Friday’ mentality of continuous discounting. This could drive significant growth for the early adopters – but may see a significant decline in revenue for the slower moving competitors.

About Fast Future Publishing

At Fast Future Publishing we develop our books using an exponential publishing model, and we have completed the successful launch of our first two books – The Future of Business (top five per cent of all business books in its first year), and Technology vs. Humanity (Amazon bestseller within one week of launch).

We are a new breed of publisher founded by three futurists – Rohit Talwar, Steve Wells, and April Koury. Our goal is to profile the latest thinking of established and emerging futurists, foresight researchers, and future thinkers from around the world, and to make those ideas accessible to the widest possible audience in the shortest possible time. Our FutureScapes book series is designed to address a range of critical agenda setting futures topics that we believe are relevant to individuals, governments, businesses, and civil society

Rohit Talwar, Founder and CEO

Rohit Talwar is a global futurist, founder of Fast Future and an award-winning speaker noted for his provocative content. He advises global firms, industries and governments on how to survive, thrive, spot and manage emerging risks and develop innovative growth strategies in the decade ahead. His interests include the evolving role of technology in business and society, emerging markets, the future of education, sustainability, and embedding foresight in organisations.

Katharine Barnett, Concept Editor

Katharine works on creating, developing and editing a variety of content for Fast Future Publishing. She has a broad range of futurist interests including societal and behavioural norms, digital and information ethics, biomedical ethics, genomics and pharmacology, and the future economies of the developing world.