APIs In Fintech – What Are The Benefits Of Using APIs? | Use cases in Fintech APIs
August 25, 2022
Fintech APIs have already gone mainstream, and the banking sector is on a generational shift towards implementing the same.
Fintech APIs have already gone mainstream, and the banking sector is on a generational shift towards implementing the same.
Privacy and blockchain go hand in hand. There has been a massive debate on Blockchain privacy or the lack of it and also how it safeguards privacy. Many have flagged predominant Blockchain privacy issues including the vulnerability toward transactional data leaks. Why was this a concern? This is because public keys of all networks are ever-visible. Security breaches have also been reported in the recent past, related to smart contracts and Ethereum. When it comes to blockchain security, there is a concept of public and private keys. Blockchain based systems make use of something called asymmetric cryptography for securing transactions taking place between the users. Every user has his or her own private or public key in the system which is a number string without any relation. The question now is, in spite of these pressing aspects, why is Fintech still biting the bait? What lies behind its all-out desire to embrace blockchain for greater consumer safety and privacy? Let’s find out! Privacy And Blockchain- How Things Stand The fintech space is no stranger to this technology which is already the hottest moot point within the Government, industry, start-up and media spaces. And why not? Blockchain enables secure data recording, making it almost-impossible to break into the system or modify it in any manner. The bonhomie between blockchain and fintech makes more sense when you perceive the former as a digital ledger with its own blocks or records. These are deployed for asset tracking and transaction recording within the network. This makes operations more democratic, providing higher security and transparency in a more optimal model for the sector, while decentralizing privacy in a way of speaking. Transactions are noted in real-time while there is a reliable transaction record, taking away the issue of modifying earlier ones. What it means is that blockchain technology can virtually make all future transactions completely bullet-proof in terms of privacy and reliability. No wonder it is becoming the new poster boy for fintech companies of varying sizes. Privacy And Blockchain- An Accepted Fact Now The trends have not gone unnoticed amongst the Mandarins in power. The Government has established its own Centre for Excellence in Blockchain Technology, as part of the Union Ministry of Electronics and Information Technology. In essence, the Government is already making use of this technology for its Digidhan platform that enables accurate reporting, monitoring and analysis of all types of digital payments transactions in the country. Talk about Blockchain going mainstream and the proof lies in the pudding. The Government has already shown the way forward, embracing innovation and Blockchain hand in hand. In fact, moving forward, Blockchain could well generate millions of worldwide jobs while adding significantly to global economies in the next decade. Fintech players are finding greater value in aligning with this technology for ensuring the absolute privacy and safety of each individual transaction. Blockchain is mostly being used for digital identity, transferring funds and setting up proper infrastructure for digital payments. These are already flagship offerings for several BFSI start-ups, fintech entities and even conventional banking players in the digital space. India is already home to 500+ blockchains throughout the financial services spectrum as per estimates. In fact, with Web 3.0 set to make a bigger splash in the coming years, blockchain (which Web 3.0 will depend upon), will assume a more significant role. It will make the banking system near-indestructible for anybody to break in or pilferage information. It will also centralize this entire network simultaneously, while lowering fraud risks for financial transactions and ensuring a higher level of consumer security. Blockchain is what will contribute towards a transparent, reliable and easily accessible system of peer-to-peer or digital lending which will be more customized across banks or fintech companies. Blockchain technology is also not stagnant; it will continue on its path toward evolution, offering newer fintech upgrades periodically. Privacy And Blockchain- What Lies Ahead? The Indian Government is already doing its bit for promoting start-ups and financial inclusion. With the Government connecting the dots between privacy and blockchain, private players will not be too far behind. Blockchain technology will be prioritized for creating these transparent, reliable and bullet-proof fintech and lending ecosystems of the future. And of course, new-age fintech start-ups and associated companies will drive this trend without a doubt. Blockchain technology is currently a beacon of hope for the fintech space in terms of higher consumer safety and privacy. However, more needs to be done to ensure its rapid adoption. Key Takeaways: Blockchain is finding favour in the fintech space. The sector is relying on blockchain for next-generation customer safety and privacy. While some security concerns remain, Blockchain has decentralized data ownership and control, thereby creating the foundation for a potentially fool-proof future ecosystem. FAQ How does blockchain support data privacy? Blockchain based transactions enable users to fully control their own information via public and private keys. They can own their data and privacy in a decentralized manner. There are no third-parties or intermediaries who can get this data and potentially misuse it. Personal information stored on blockchains are accessible and controllable by owners. They will have full control over the access of their data by third parties.
The COVID-19 pandemic made cloud adoption mainstream worldwide and across almost all business sectors. With more companies switching to flexible and scalable IT expenditure models, Cloud FinOps helps keep cloud spending under control while managing the same seamlessly. But that’s for the enterprise space. How then is FinOps filling up cloud gaps in the banking sector? Let us find out. FinOps And Its Functioning Framework FinOps is a cloud-based operating model, enabling a paradigm shift with systems, best practices and tools that collectively optimize and control cloud spending at organisations. It necessitates enhanced cost awareness and promotes this philosophy through a collaborative ecosystem encompassing finance, IT, engineering, business and procurement divisions of any company. Through the promotion of optimized and responsible spending and scaling up accountability from a financial perspective, FinOps enables informed and improved decision-making for businesses. The core of the system is the centralized model of reporting and governance that enables better optimization of public cloud-based resources. The entire spending and performance matrix is brought into a single, decipherable space visible at every level of the company. The Three Phases Of FinOps Inform- Teams throughout the entity are given higher visibility and decision-making capabilities along with allocating cloud spend for showback and chargeback more accurately. Benchmarking via KPIs and metrics for performance tracking and spurring ROI while remaining within the forecasting/budgeting spectrum. Optimize- Actions taken for the identification and tracking of efficiency drives include reducing cloud wastage, storage access optimization and rightsizing resources that are not utilized, under-utilized or over-used. This includes enhancing automation and optimizing the utilization rate while enhancing instances reserved for discounting. Operate- Companies should keep adopting cloud-based usage and governance controls for their resources in the cloud. The phase will also encompass analyzing overall business goals against metrics and overall effectiveness with a view towards KPI-driven improvement. How It Can Help In The Banking Space? FinOps mechanisms may help banking and financial services firms with the following: Forecasting spends. Application of best practices on optimizing costs. Take decisions informed by metrics. Ensure continual savings on costs and greater value. Central governance teams were deployed with finding cost optimization opportunities in sync with cloud providers. Internal benchmarking of metrics, systems and KPIs for tracking performance vis-à-vis business goals for real-time decisions and enhancements. Governance systems are tailored and executed for tracking spending along with optimization recommendations. Opportunities are continually found to optimize cloud architecture and managed services. Real-time insights on costs are available for people at all organisational levels. Such visibility helps manage budgets and detect spending issues before they snowball into severe monthly shocks. FinOps will ultimately mature towards a watershed mark where unit economics or business value will directly correlate and link to cloud spending. Hence, greater spending clarity and the accuracy of metrics will help banking and financial services players (and companies in all other sectors) build achievable goals based on business performance while identifying areas for spending to scale up returns from investments in the cloud, simultaneously generating added value. Wrapping Up FinOps is thus the best solution for filling up the cloud gap in banking and financial services, something that is a necessity in today’s ever-evolving business lexicon. FinOps helps businesses view the tangible value achieved and fills up the gap through a more structured perspective toward controlling cloud service costs and realization of anticipated values. FinOps also has the scope of showing the value of the investment made in the cloud by the organisation, irrespective of its current stage. With banking and other financial services players increasingly transforming towards cloud-based organisations, effective management and spend optimization will be crucial for them. That is the area where FinOps can play a vital role.
Challenger banks have witnessed phenomenal growth over the last few years, becoming marshals of the global fintech space. These banks have set the cat amongst the pigeons in conventional banking globally with more innovation, digital-led offerings and unique and multi-dimensional customer service. With a customer is king template and the spirit of coopetition or positive collaborations in the space, challenger banks could well be the fast-growing Davids amidst banking Goliaths today. A Little About Challenger Banks Challenger banks are intrinsically technology companies, tapping their expertise and software to streamline and digitize conventional retail banking. These entities are strongly leveraging digital channels for distribution (usually mobile-based) to provide highly competitive services in the retail banking segment. These include savings and checking accounts, credit cards, insurance and even loans. How Do They Differ From Their Regular Peers? Retail banking has always emphasized the presence of a branch and in-person experiences, while challenger banks are always tech-driven, depending on desktop/mobile platforms. They harp on customer experiences and continual improvement, targeting those desirous of online banking without visiting any retail point. Challenger banks are gaining ground among customers who are shying away from conventional bankers and institutional players post the worldwide financial crisis. They are posing a literal challenge (true to their name) to the business models of retail bankers. This is being done through low and transparent fees charged to customers, faster service offerings and superior user experiences via 24-7 agile digital platforms, which can give legacy banking software a run for its money. Challenger banks are also reaching out to under-served or un-served demographics (for conventional retail banks), including those in lower-income groups or without credit histories, for instance. The Digital Banking Revolution And What It Means Reports highlight 240,000 bank branches throughout Europe in 2019 when digital banking was still in its nascent stages. Yet, challenger banks are expanding with the premise of people moving completely towards mobile and digital banking in the future. Digital banking has broken records ever since, with branch counts in Europe reducing to 165,000. It could well go down even more over the next few years, per domain experts. Some reports forecast how 3.6 billion global citizens (almost 1 out of 2 adult individuals) will use digital banking by 2024, across desktop and mobile channels. The United Kingdom (UK) has already embraced the Digi-banking wave and more countries in the continent are in the queue. The coronavirus outbreak added fuel to the fire, leading to the closures of several retail banking branches and accelerating the adoption of digital banking platforms. Global usage of mobile payment and banking apps went up by 26% in H1 2020, per surveys. Challenger banks are feeding off this digital shift, while conventional bankers continue maintaining branch-based models, developing their online offerings simultaneously. How Coopetition Is The New Mantra For Challenger Banks? What is this new keyword coopetition that is being widely discussed at a global level? What has it got to do with worldwide fintech and challenger banks? The word fuses the terms competition and cooperation. This means that challenger banks are partnering with conventional banking institutions for building new services, products and industry solutions. Many industry stakeholders feel that this is the best future pathway for the banking and financial services sector in terms of innovation. They highlight collaboration and teamwork as necessary virtues for creating a future ecosystem that serves customers even better and in more innovative ways. Key Schools Of Thought And Developments The collaboration will ultimately unearth higher consumer benefits, and feel industry veterans. Fintech players/challenger banks and conventional banks may not always be competing in the same segments. They may have different customer sectors and demographics. This may help in building newer avenues for feeding off each other, stimulating a spirit of continual learning and growth. Coopetition may not only encompass teaming up to build new products and services but also knowledge exchange via webinars, forums, industry conferences and best practices. Some feel that competition and coopetition represent similar ideals. Businesses will always have goals putting them directly against other entities in the same industry. However, this does not hinder collaborative work in areas beyond the competition. Some of these areas highlighted by experts include enhancing overall financial inclusion for instance. Several challenger banks are already partnering with conventional peers for enhancing outcomes for consumers, including more people who would not normally fit into traditional lenders’ profiles. Some Other Things Worth Noting Some industry experts also opine that almost 1/3rd of the millennial generation may have already switched to digital banks as primary providers of checking accounts. Hence, they claim that digital entities are not challenger banks anymore but are a part of the mainstream. Some claim that this indicates how digital banks have already won the battle against their traditional counterparts while some indicate this as a natural response to the shifting demands of consumers. Some feel that banks and institutions should sync their future goals digitally with building experiences for consumers. More than 50% of people will only work with institutions offering digital account opening in the future according to these experts. Many flags the role played by legacy vendors in the global banking sector with outdated technological expertise and acquisition-driven approaches toward future innovation. The Core Takeaway The whole world is closely following the next phase of the ever-evolving relationship between conventional lenders and fintech players (challenger banks). How will it pan out? Can conventional lenders adopt a more agile mechanism towards shifting consumer preferences, teaming up with challenger entities to speed up their procedures, include more people into the portfolio and build innovative experiences for customers? Can coopetition work in such a hotly contested space? Will this become a successful operational model for the BFSI sector globally? An insular way of doing business is no longer possible technologically at least. If you keep that aspect in mind, think how Apple offers Google apps in its App Store or how Microsoft has gone ahead to include not just the Windows OS for
Unfair bias is the most complex, controversial, and biggest issue in data handling. In the insurance sector, the Data Ethics Policy provides a unified framework that outlines how to properly use data. Data and privacy are a tag-team, and their separation initiates concerns for customers. In this industry, ensuring data security is critical. The rapid entrance of emerging technologies in insurance brought up an opportunity to unlock new value. To seize that, data analytics may be the differentiator as this industry is reshaping to a data-driven one. However, opportunity and value are not the only things to prioritise. It needs to deal with a complete and controlled data transformation based on societal expectations and views. What Is Data Ethics In Insurance? Data ethics pertains to data practices for collecting, spawning, analysing, and circulating both unstructured and structured data. If misused, it has the potential to adversely influence society and people. It includes the moral obligation to collect, protect, and use personally distinguishable information. Insurance is a growing market for data analytics since it deals with sensitive consumer data. This posed ethical issues in the industry, such as improper consumer data processing, data breaches, and the use of client data without consent. An insurance service provider’s image and reputation are harmed as a result of this. Here, the data ethics policy provides an open, transparent, and complete view to keep the customers aware of how their personal data is being used to calculate customised claims, premiums, and policies. A common practice is the implementation of an analytical solution model for customers’ data. This is to enhance the accuracy of risk profiling and their behaviour anticipation. The question is, whether the use of customer data is morally justifiable. This triggers ethical dilemmas under the niche of control and transparency. The Data Ethics Dilemma In The Insurance Industry Data maximisation vs. data minimisation: Data minimisation restricts the algorithms to generate biases. But the best outcomes from the AI algorithms in data handling are obtained in the case of data maximisation, which is prone to causing ethical dilemmas. Situational Ethical Boundaries vs. Uniform Ethical Boundaries: The insurance companies encounter the ethical dilemma of whether to consider different or same ethical boundaries in every situation. Leveraging data to influence customer behaviour: Use of data for monitoring can help customers to maintain their long-term insurance plans. But unwanted side effects may hamper customer behaviour due to the disclosure of personal data. Ways Out Of The Dilemma Data ethics policy largely relies on the principles and guidelines for obtaining new analytical solutions as data is increasing continuously. The guidelines push the insurance companies to conduct incessant discussions for future improvement of data ethics. Explainability: Data analysed decisions should be interpretable to data subjects. Value Alignment: Maintaining alignment between human values and incorporated values in data analysis such as transparency, respect, and honesty. Responsibility: Defining data analysis and data use responsibilities in insurance organisations. Human Autonomy Respect: Human autonomy is to be respected while using analytics and data. Organisational embeddedness: Embedding data analysis and data use principles throughout the organisation. Auditability: Handling the auditable factor of data and analytics for ensuring public trust. Data Ethics Policy development in the insurance sector kicks off with the implementation of IT security policies and risk management. Consent mechanisms to use data of the policyholders is the next big thing in the queue. Utilising data-centric technologies to ensure customer transparency is the final criterion. The Road Ahead The new normal has driven data ethics to acquire a top spot in CEO agendas. Across the world, data ethics watchdogs are gaining increasing interest to deal with ethical issues. This is an opportunity for the insurance industry to gain long-term customer trust.
Did you know over 50 million people worldwide are unbanked? This paves the way for electronic money or e-money, as a smartphone is the only requirement. E-money is the electronic monetary value store operable through technical devices to make payments. But doubts regarding its safety are in the air. Why E-money? Per this research, banks worldwide are integrating e-money to offer an efficient currency transaction facility to their customers. It aids the execution of global money transactions at the speed of thought. It also improves recordkeeping without any physical burden. Why Make E-money Safer And How? Electronic money allows cashless transactions and is considered transparent and safe in general, drawing millions of users who depend on e-money to make up for their lack of formal bank accounts. But loopholes are emerging as it continues to evolve and become integral to our daily lives. To prevent the electronic payments industry from becoming unsafe and unreliable, stricter enforcement is essential. E-money functions on a regulated framework, unlike other private digital money gateways. This fails to guarantee the desired protection and security paradigms required by today’s consumers. A robust and comprehensive framework having restrictive rules is the best possible remedy. Establishing operational systems for risk management and governance on the framework would protect consumer data, handle disclosure fees, and deal with customer complaints. To protect customers’ funds, safeguarding and segregating approaches are mandatory for all issuers to implement. Maintaining a secure liquid fund pool equivalent to customers’ balances is a critical safeguard. This would ensure monetary recovery in the event of bankruptcy and fund misuse. However, the lack of clear bankruptcy regulations for e-money issuers might cause money segregation to backfire. Customers would also be deprived of quick access if issuers fail to solve the problems as the fund stays apart. The combined solution is continuity assurance of critical payment services through a recommended set of rules and policies. There is a continuous push to expand the e-money presence globally. FCA data presented companies to process more than £500bn of transactions for 12 months till June 2021. Depending on the size and business model of the e-money system, supervisors and regulators must set up user safeguards and increase prudential control. The countries having systemic issuers need to maintain payment service continuity and preserve customers’ funds, simultaneously. This requires extra efforts to assure protection and make it work effectively. Customer accessibility issues can be resolved by using services that are easily changeable and repairable.
In the financial world, good old banks running traditional core systems are facing an uphill task – how to navigate through an ocean of data to understand customer behaviour, and then use those insights to better their offerings. Welcome Artificial Intelligence (AI), which, unlike humans, can parse tons of data to help traditional financial service providers uncover new product and service opportunities, while also red-flagging anti-money laundering patterns, and identifying fraud. And it’s a trend that is catching on fast. The use of AI in global banking is estimated to grow from a $41.1 billion business in 2018 to $300 billion by 2030. Per a McKinsey Global AI Survey report, nearly 60 percent of financial services companies have been utilising atleast one AI capability. Currently, AI technologies in vogue include virtual chat assistants for customer service interfaces, machine learning techniques to support risk management and robotic process automation for structuring daily operations. Incumbent banks primarily have two sets of objectives to fulfil with AI. First, they aim at speed, flexibility and agility, inherent in a fintech. Second, they must adhere to compliances, standards and regulatory requirements of a traditional financial service company. However, deploying AI to do the heavy lifting isn’t as easy as pushing a button. In fact, big challenges remain in building responsible and ethical AI systems and simultaneously, traditional financial institutions struggle to deploy in-depth AI capabilities to truly harness its full potential. Here are some key challenges global financial companies face in implementing AI Data quality and weak core structures Research finds that the existing data sets in circulation are mostly third-party, unstructured, and a lack of due diligence makes it difficult for AI and ML systems to identify overlapping and conflicting entries. Also, the existing control frameworks lack support for AI-specific scale and volume. Plus, the algorithm results can even show biased results when written by developers with a biased mind. For instance, A 2020 report stated that Apple cards give upto 20 times less credit to women as the decision AI was fed with an untested, historically biased data set. Clearly, the financial domain lacks a clear and ethical AI framework to ensure data quality and strengthen the core data structures. Lack of standard processes and guidelines A clear strategy for AI in the financial domain is the need of the hour. Presently, the inflexible, incompetent and weak core structures are bound with fragmented data assets, hampering collaboration between business and technology teams, further resulting in outmoded operating models. It is pertinent that traditional financial organisations consider the context, use case, and the type of AI model implemented to analyse the appropriate approach while collaborating or upscaling their core tech systems. Lack of talent AI adoption maybe the talk of the town, but surveys evaluating AI success rates reveal a not-so-happy picture. Per O’Reilly’s 2021 AI Adoption In The Enterprise report, 25 percent of companies saw half their AI projects fail. Analysis reveals that a key reason for that failure is the lack of capable talent and the ability to reskill in line with a long-term vision. To make things worse, too many firms see talent strategies as an administrative hurdle versus a strategic enabler, resulting in a lack of proper framework around hiring and reskilling in the AI domain. Budget constraints An omnipresent challenge associated with AI investment is determining the source of money. Will it be an IT project, a change management project or an innovation project? The definitive answer is all three, but only a small fraction of the budget is assigned to AI projects. But there is some good news on this front. With organisations gaining interest, The Economist’s research team found that 86% of Financial Service’s executives plan to increase AI-related investment over the next five years, with the strongest intent expressed by firms in the APAC (90%) and the North American (89%) regions. The road ahead A significant commitment towards AI investment is the need of the hour with a clear focus on bringing in the required human resource capabilities to the front. Businesses that scale with AI over time, with an unwavering focus on compliance, customer satisfaction, and retention will be the ones laughing all the way to the bank.
All novel technologies are harbingers of change in society. Human activities would invariably transform around it, leaving the old ways behind and embracing the new wave abound. Banking, your good old retail banking, is not an exception too. It will transmute as per the technical limits set by various emerging technologies. Banks not recognizing this fact will eventually fail as their customers will move their business to places that offer the greatest convenience of use, faster transactions, and the most insightful prescriptions on how to best mobilize their funds. Emerging technology, all of which are already here, will enable retail banks to provide all of the above features, optimally. INT. would like to present to you a fun 10-minute read on what we foresee in the future for banking. A Banking scenario fueled by an amalgamation of emerging technologies The simple truth is when consumers really want something, they really want it then and there. And there lies the importance of rolling out 5G. It will reduce latency or lag times of accessing web/mobile functionalities to under 1 millisecond. When this is applied to banking, that’s the closest we can get to real-time transactions, product, and service purchases. All that would be executed without a nagging delay. That’s great right? But wait. I would imagine you are asking about what 5G really brings to the table. In my opinion, it acts as a pivot, an enabler, for a multitude of technologies to be delivered through various services in the remotest of places. Imagine yourself in the countryside and your spouse calls you to transfer the money instantaneously. With a pervasive 5G network, this can be done without a sweat. However, we haven’t even reached the exciting part of what we, at INT. would like to tell you. Consider a voice-enabled wearable device that’s on you, taking your voice-based (the wearable based Artificial Intelligence (AI) powered banking application would only act on your voice) instructions for the impending transaction. Furthermore, if you have glasses for virtual reality (VR), your eye movements would allow you to select your spouse’s profile for the payment, working in conjunction with your wearable-based app. Alternatively, Robotic Process Automation based on voiced keywords that act as triggers would take care of the payment amount and beneficiary along with the payment itself. All this without lag, thanks to 5G! You could throw in some blockchain technology for further security of the transaction (don’t worry too much about the advent of portable Quantum Computers to break the blockchain encryption because they are not expected in the next decade). It wouldn’t be far-fetched if it was actually some cryptocurrency that was being transferred through the application (Retail Banks and Crypto? J.P. Morgan had launched its own Initial Coin Offering (ICO) in 2015). Let’s now throw in some gamification where the same VR wearable device will allow you to earn points for future redemption through a game (Google Pay’s gamification is the inspiration here – please don’t forget that banking nowadays can be fun). I know the last one was offbeat, but here’s something that everyone would love! The AI through the app suggests some flowers for your spouse as a result of the Recommendation Engine sifting through the big data generated from your spend patterns (this is what some proponents of Open Banking are doing today – your bank could do the same, only through your explicit permission given to the app) and learning from it. There’s a strong chance, the above paragraphs were stretching what would be possible in the next few years but even if we could have half of what was mentioned, it will still be fantastic towards ensuring the best customer experience in an edge situation (no pun intended, I will explain why). Nevertheless, let’s summarize the technologies involved in the scenario presented: 5G powered Edge computing (related to Cloud computing) through the wearable AI to recognize the Customer’s voice commands for the app to ensure biometric security VR enabled the operation of the application through the eyes (with the help of an eye tracker – do look up HMD on Wikipedia if you have the time – this tech is coming) Blockchain-based security (instead of verification of the transaction using proof of work or proof of stake as a consensus mechanism, we could use proof of location if the Customer has intimated the app about the whereabouts) Cryptocurrency for payments (powered by blockchain as mentioned in point number iv) AI-based Recommendation Engine that allows banks to promote purchases of their products/services and even transactions Robotic Process Automation was mentioned as an alternative for seamlessly tying up a chain of events such as executing the selection of a payee and payment amount Summary On a serious note, while it looks sophisticated to cook up concoctions of interwoven technologies, it is a different matter altogether to actually derive a doctrine for logically conducting business with any of the technologies mentioned in the write-up. It is difficult to implement a viable strategy without the involvement of a competent Digital Transformation specialist, well versed in both the technologies and the implementation strategies. While strategy is paramount to the success of a company’s digital transformation, let’s broach the topic of an incentive to initiate a thought process that involves the rapid implementation of it. Consumers have never been the kind who are forgiving when they are not satisfied by a service or product that your bank might be offering. If a business cannot bring them value through their offerings of products and services, they will simply look for a more suave rival who would satisfy their needs. Traditional retail banks will need to be on their toes as non-banking fintechs are already hot on their heels, looking to overtake them. However, history does not care about losers, it only remembers the victors. If banks embrace the best of technology and ensure that there is velocity, volume, value, variety, and veracity in their operations, they will come out tops. However,
Financial services loyalty programs are customer maintenance devices intending to expand brand love and purchase frequency for banks and insurance agencies. Loyalty program for retail banks has been there for years, customers no longer perceive these programs as proper rewards for their loyalty. They are becoming more selective in choosing companies that offer them the most personalized benefits. A successful loyalty program is characterized by a variety of unique features that separates them from other, more customary award frameworks: Since clients don’t buy items from a customary perspective, monetary and bank loyalty programs rather boost individuals to spend money using their credit cards or feature services packages, like loans or mortgages. On account of their unique nature, enlistment to financial loyalty programs is restricted. In order to become a member, people need to have an active account, if not they will not have the option to advance. Organizations in this industry have less freedom to cooperate with their faithful audience. Customers by and large possibly go to them when it’s an ideal opportunity to recharge an agreement or contract. That is the reason making new touchpoints is a priority in loyalty programs. Financial and bank rewards programs are frequently used to promote content. It generally educates individuals about current offers and expands the brand’s online presence. Best Loyalty Program Features for Financial Services With the main objectives characterized, it’s an ideal opportunity to explore all the elements that modern loyalty programs proposition to help banks and insurance agencies stand out and gain customer trust. Loyalty and Dedicated Logic for Financial Services Account-based enrollment and rewarding renewals Customizable loyalty program types Omni-channel Insurance: Reward healthy lifestyle An Experiential Reward System A rich reward inventory with incentives from accomplices Offer Administration Reward Sharing The Mobile Wallet as a digital loyalty card Elements to Engage Customers Outside of the Buying Cycle Free membership rewards Exclusive clubs Sweepstakes Content utilization How to build a successful loyalty program in retail banking New Business isn’t really new. Revisit your Customer Profiles and Profitability. Manage and Mine your Valuable Data. Keep it Simple and Transparent. Be Digital, yet likewise physical. Accomplishing the Consistent Experience. Customers Want Your Loyalty Program. Loyalty programs are not new to retail banking. While there are still banks who need to go all in, even saving money with setting up programs are caught up with upgrading them to make them more receptive to their clients’ requirements. A lot of money is spent creating these projects, with advertisers excitedly expecting extremist development in deals, diminished client beat and other KPIs that will make their chiefs grin. Truly, a significant number of these drives barely make a wave or cause greater action without extra benefit in light of the fact that the clients who exploit the program are not the dependable ones but rather deal trackers, who are just about as reasonable as not to move to another bank if they see a more alluring deal. One of the vital explanations behind this is that, while everybody perceives that loyalty programs are tied in withholding clients, a lot of the emphasis is on securing with regards to plan and execution. This division has been seen by Forrester in a report appointed by Deluxe in 2015. Although the review included respondents from different industries, 33% of the respondents were from financial foundations. Although all agreed that loyalty was about expanded maintenance, 66% of the emphasis was on new business. Obviously, there is a procedure for fulfilling and drawing in steadfast clients that focuses harder on the clients it needs than those it as of now has. The colloquialism “A bird in the hand is worth two in the bush” applies here. It is normally perceived that it costs somewhere around 5 fold the amount to secure a client as to hold them. There is nothing wrong about drawing in customers with an engaging dependability program; simply comprehend that a new customer is not a loyal customer. Surprisingly, 81% of the measurements for accomplishment in these very programs centre around maintenance, a reasonable mismatch with the destinations expressed above. Obviously, most respondents were baffled by the results of their programs. The sad truth is that new customers are not loyal customers. US banks experience a customer stir of around 20% inside the principal year of onboarding a customer, and 17% of new customers will register dissatisfaction with administration in their first year. What is more regrettable, of the 20% who leave, a big part of those pricey acquisitions will leave in the initial 90 days. Recollect that, except if your client has a place with Generation Z, they are another bank’s old client, and they might even have kept that record and are simply trying things out with you. The graph below, from Bain and Co, is from 2013, yet the circumstance has not improved. You will see that certifiable new records are the minority; the greater part are “switchers” moving to start with one bank then onto the next. Interestingly, a customer who has been with you for 10 or 20 years is more averse to leave will in any case acquire income without every one of the expenses related with the securing. The American Banking Association (ABA) explored the Baby Boomer market as of late and concocted a few figures that give something to think about. Many banks are running loyalty programs for every unacceptable reason, searching for another business when they ought to be focusing on the wealth of their existing customers.
Today we are experiencing a powerful transforming time where technology is dominating in every sector. be it pharma or financial services, technology is everywhere. No other would have been better than knowing more about fintech applications. To sensitise our readers of a novel domain of financial technology or fintech, that has been creating waves in the financial sector for at least 5 years now. We kick off this series with a composition on ‘5 essential Fintech app types that you need to know. Happy reading! What is Fintech? As per open-source definitions, Financial technology or Fintech is the technology and innovation that aims to compete with traditional financial methods in the delivery of financial services. It is an emerging industry that uses technology to improve activities in finance. The top 4 categories of fintech There are four broad categories of users for fintech: B2B for banks Their business clients B2C for small businesses and Consumers Technologies used for fintech applications Fintech companies use a variety of technologies, including artificial intelligence (AI), big data, robotic process automation (RPA), and blockchain. AI algorithms can provide insight into customer spending habits, allowing financial institutions to better understand their clients. Chatbots are another AI-driven tool that banks are starting to use to help with customer service. Big data can predict client investments and market changes in order to create new strategies and portfolios, analyze customer spending habits, improve fraud detection, and create marketing strategies. Robotic Process Automation is an artificial intelligence technology that focuses on automating specific repetitive tasks. RPA helps to process financial information such as accounts payable and receivable more efficiently than the manual process and often more accurately. Blockchain is an emerging technology in finance that has driven significant investment from many companies. The decentralized nature of blockchain can eliminate the need for a third party to execute transactions. What are the different types of fintech? There are various types of fintech companies that exist today, which are mostly categorized based on the industry their clients belong to, which include: Lending Payments International Money Transfers Personal Finance Equity Financing Consumer Banking Insurance Ant Financial What are the different types of fintech apps that exist? There are various software applications of Fintech that exists: Crowdfunding Platforms. Crowdfunding platforms like Kickstarter, GoFundMe, and Patreon are the result of developments in fintech Mobile Payments. Mobile payment applications and gateways are some of the most prevalent uses of fintech and act as wallets for both normal currency and cryptocurrency Robo-Advisors Insuretech Regtech Cryptocurrency exchange However, we can broadly classify them into 5 types of fintech apps: Digital Payments Digital payments refer to making payments in a cashless manner, quickly and safely. Fintech apps with online payment systems, e-wallets and digital currencies facilitate digital payments. Digital payments tend to be one of the most prominent branches of the fintech industry. Statista estimates that global digital payments’ value will reach USD 6,685,102 Million by 2021. Digital Banking Banks develop fintech apps for their clients as digital banking has become a very convenient way for their users to manage their bank accounts and for bank officials to manage their clients’ data. Digital banking fintech apps help users manage their bank accounts online without visiting banks at every minor inconvenience. Digital Lending Digital lending fintech apps include loan apps and lending software that facilitate conversations and settlements between lenders and borrowers. Financial institutions like banks and individual lenders use fintech apps to simplify loan procedures and manage them efficiently. Digital Investment Digital investment fintech apps allow investors to research and invest in different financial assets and stock markets. Such apps supply relevant and insightful data to users to make informed decisions about their investment plans and act as a platform to facilitate investments. Consumer Finance Consumer finance fintech apps help their users in personal finance management. Such apps provide relevant tools and features to users to manage their expenses well, plan budgets and indulge in thoughtful spending. Now that you know about the different kinds of fintech apps let’s look at the various innovative trends to build a fintech app.