1、INDEPENDEN T P U B L I C AT I O N BYRACONTEUR.NET26/06/2022#0814“The war in Ukraine has highlighted how financial connectivity across borders isnt as strong as it could or should be,”she adds.“If a country is excluded from a global payment infrastructure or if know your customer(KYC)and credit histo

2、ry data cant be shared across borders,its often the people who are fleeing war that face difficulties accessing finance while theyre resettling.”Mikkel Velin is co-CEO at embedded finance provider YouLend.He also sees KYC as a big problem,given stringent iden-tification requirements that can exclude

3、 refugees from obtaining mortgages and business financing.Fintech solutions,he suggests,offer an answer by focusing on more data streams that can be analysed far more quickly.“The main issues are discrimination and misunderstanding possibly subconscious over what data is needed in the 21st cen-tury

4、to determine if someone is eligible to access certain products and services,”he says.“Wider data sources and open banking can allow banks and lenders to make more concrete risk assessments.”Elsewhere,other companies are solving different problems.For example,Cheqd uses the blockchain to store and va

5、lidate identities,known as self-sovereign identity(SSI).Along with its Turkish partner Tykn,this solution has been piloted by the government in Turkey to optimise and speed up the issuing of work permits to ref-ugees and then hold the validated docu-ments in a digital wallet.There is another critica

6、l area that fintech companies must consider when it comes to conflict.This is about the enforcement of global financial sanctions,such as those levied against Russia.Fintech solutions are deployed to prevent fraud in this area,with startup SEON recently raising$94m Access all areas:new routes to saf

7、etyDigital solutions could help internationally displaced persons prove and protect their identity and combat sanctions evasionhe world is in the middle of geopo-litical upheaval.The invasion of Ukraine by Russia has displaced millions of people and threatens global food security.Refugees have fled

8、from Syria to Sudan,making perilous journeys to safety or asylum.In such circumstances,it is easy to under-stand how people might leave home with-out valid identity documents.The problem then is that they soon face short-term finan-cial exclusion.To mitigate this,fintech companies are searching for

9、ways to ensure that people can access the information that they need to quickly rebuild their lives.Kateryna Danylchenko is CEO of the International Bureau of Credit Histories(IBCH)and has experienced both sides of this tough situation.Since war came to Ukraine,she has closed her offices,evacuat-ed

10、staff and taken refuge in France.She says:“With limited or no documenta-tion and no access to some bank accounts,refugees and migrants were often met by a brick wall when they were trying to find employment,accommodation or make pay-ments in their host country.“Since the start of the conflict in Ukr

11、aine,rapid advances in fintech have allowed me to continue to access basic financial services.Ive been able to open an account at an alternative digital bank,send money to family and friends,identify myself to landlords and book temporary accommodation.”Fintech solutions also enabled Danyl-chenko to

12、 top up her mobile phone account,crucially allowing her to communicate with friends and family.It also meant she could buy aeroplane tickets for a mother and daughter she met in a Kyiv shelter,so they could relocate to Madrid.Usefully,IBCH is a Ukrainian subsidiary of fintech firm Creditinfo,a credi

13、t rating agency focused on harnessing alternative data in emerging markets.As a result,Danylchenko sees first-hand how this can be used by fintech companies to assist refu-gees when one big challenge remains iden-tity authentication.Creditinfo works with central banks,international monetary organisa

14、tions,banks and other financial institutions to give refugees in Poland,Moldova and the Baltics access to credit reports that are used as a stand-in for that identity information.Danylchenko says that fintech initiatives will continue to play an important role in Ukraine,and beyond,facilitating acce

15、ss to at least basic financial services for refugees.But while developments such as open bank-ing and open finance have offered better connectivity within regions,she notes that financial services and transactions are increasingly international in nature.Fintech businesses are well placed to deliver

16、 enhanced cross-border compatibil-ity but,according to Danylchenko,this will only happen if governments and central banks keep up with the potential and do more to provide international bridges.Simon BrookeA freelance journalist with 25 years experience of covering business and finance,the luxury se

17、ctor and communications.MaryLou CostaA writer specialising in technology,innovation and startups.Her work has featured in The Guardian,Business Insider,Sifted and more.Ben EdwardsA freelance journalist with more than a decade of experience covering finance,business,technology and law.Cath EverettAn

18、experienced journalist specialising in the workplace,leadership and what it means to be an ethical business.Rich McEachranA journalist who covers the intersection of business,technology and sustainability for outlets including Wired and The Guardian.(77m)in funding for that purpose.The war in Ukrain

19、e is now driving demand for anti-fraud solutions to combat sanctions evasion by politically exposed persons.SEON CEO Tamas Kadar explains how machine learning democratises fraud pre-vention and fraud detection,allowing fin-tech to ensure stringent measures that allow current sanctions to be upheld.“

20、Fintech companies can do their bit to help cut off some of the resources pouring back into the hands of unsavoury actors,”he explains.“Without careful management,though,fintech businesses could soon find themselves being used to circumvent these sanctions.“Without the right strategies and tech-nolog

21、ies in place,such solutions have the potential to be exploited.The fallout would not only affect individual fintech businesses but could lead to the industry being seen in a negative light by some,moving forward.”Gabriel Hopkins is chief product officer at Ripjar which was founded by former GCHQ tec

22、hnologists and agrees.The company uses AI to counter financial crime by automatically identifying risks from data.It also works to transform institu-tions approaches to KYC and anti-money laundering solutions.Hopkins says the implementation of sanctions is“extremely complex”,given the ties between R

23、ussian individuals and companies to Europe and the UK.This presents a huge regulatory chal-lenge for the industry:fintech businesses such as neobanks are 100%digital,using apps and online platforms rather than brick and mortar,while other businesses trade internationally.Hopkins maintains that banks

24、 and other financial institutions must adopt a“balanced sanctions and watchlist management approach”if they are to guarantee“100%adherence”to global sanctions lists.And,he says,it is vital to use other supplementary lists to have an holistic view of risk.He points to machine learning and advanced an

25、alytics to automate the screen-ing process.In addition,next-generation name-matching software can ensure banks and financial players can“maximise true positive hits on global sanctions and watch lists and minimise false positives”.But to achieve this,Hopkins highlights one particular major advance t

26、hat will be vital and which is now needed urgently:fin-tech companies tapping into a range of lan-guage systems.He adds:“There will be an even greater need to process matches that include Cyril-lic,Asian and other character sets with Western or Latin names and vice versa.“Being able to distinguish b

27、etween Lati-nate and non-Latinate language systems is key for names that have alternate spellings.And,to be able to draw links between them.“For example,the name Vladimir can appear entirely different and would conse-quently need to be tracked separately,but it also must be treated as the same name.

28、”Distributed inPublished in association with/future-fintech-2022raconteurraconteur-mediaraconteur.storiesFUTURE OF FINTECHAT T R I T I O NO P E N B A N K I N GI N F L AT I O NWhats driving the spike in layoffs in startups and scaleups?Why more firms should embrace plug-and-play solutionsConsumers ta

29、ke up budgeting tools due to cost-of-living Jonathan WeinbergTContributorsWorld Economic Forum,202182.4millionrefugees,currently,up from 42.5 million in the past 10 yearsNUMBER OF PEOPLE DISPLACED BY CONFLICT CONTINUES TO GROWNumber of refugees and internally displaced persons(IDPs)worldwide from 20

30、10 to 2020 Without careful management,fintech businesses could be used to circumvent sanctionsG E O P O L I T I C SAlthough this publication is funded through advertising and sponsorship,all editorial is without bias and sponsored features are clearly labelled.For an upcoming schedule,partnership in

31、quiries or feedback,please call+44(0)20 8616 7400 or e-mail .Raconteur is a leading publisher of special-interest content and research.Its pub-lications and articles cover a wide range of topics,including business,finance,sustainability,healthcare,lifestyle and technology.Raconteur special reports a

32、re published exclu-sively in The Times and The Sunday Times as well as online at .The information contained in this publication has been obtained from sources the Proprietors believe to be correct.However,no legal liability can be accepted for any errors.No part of this publication may be reproduced

33、 with-out the prior consent of the Publisher.Raconteur MediaLead publisher Farihah ChowdhuryDeputy editorFrancesca CassidyHead of productionJustyna OConnellDesign/production assistantLouis NassManaging editorSarah VizardReports editorIan DeeringAlthough this publication is funded through advertising

34、 and sponsorship,all editorial is without bias and sponsored features are clearly labelled.For an upcoming schedule,partnership inquiries or feedback,please call+44(0)20 8616 7400 or e-mail .Raconteur is a leading publisher of special-interest content and research.Its pub-lications and articles cove

35、r a wide range of topics,including business,finance,sustainability,healthcare,lifestyle and technology.Raconteur special reports are published exclu-sively in The Times and The Sunday Times as well as online at .The information contained in this publication has been obtained from sources the Proprie

36、tors believe to be correct.However,no legal liability can be accepted for any errors.No part of this publication may be reproduced with-out the prior consent of the Publisher.Raconteur MediaSub-editorsNeil Cole Gerrard CowanChristina RyderDesignKellie JerrardColm McDermottSean Wyatt-LivesleyDesign d

37、irectorTim WhitlockIllustrationCelina LuceySamuele MottaUnited Nations High Commissioner for Refugees,202210m20m30m40m50m20000192020RefugeesInternally Displaced Persons(IDPs)Charles Orton-JonesAn award-winning journalist and the former editor of EuroBusiness.He cover

38、s the fintech sector and high-growth startups.Tom RitchieA freelance business journalist who specialises in covering the future of work,HR management matters and leadership.Oliver PickupMulti-award-winning journalist specialising in business,technology,sport and cultureJonathan WeinbergA freelance w

39、riter whose specialisms include technology,business,and the future of work and society.United Nations High Commissioner for Refugees,202283%of refugees are hosted in low-and middle-income countries The war in Ukraine has highlighted how financial connectivity across borders isnt as strong as it coul

40、d or should beF U T U R E O F F I N T EC H02The sector has attracted increasing levels of investment and interest.The total financing volume in Q1 2022 reached$37.4bn,the third largest level,behind Q2 and Q3 of 2021.Where is the money coming from and,perhaps more importantly,where is it going to?FIN

41、ANCING FINTECHWHERE IN THE WORLD IS FINTECH REALLY TAKING OFF?Q1 2022 fintech financing activity by region(Number of deals)Financial Technology Partners,2022Deloitte,2022KPMG,2022GLOBAL COMPETITION FOR FINTECH FINANCINGLooking at the percentage of global early-stage deals shows the US and Asia are t

42、ying for the first time 4035302520151050USAsiaWILL THE UPWARD TREND IN FUNDING CONTINUE?Growth in fintech funding in the capital markets sectorTHE MOST POPULAR PATHS TO INVESTING IN FINTECHGlobal venture,private equity and M&A activity in fintech in terms of deal value($bn)$27bn$41bn$39bn$28bn$61bnN

43、/A49%39%48%28%2017 2018 2019 2020 20212017 2018 2019 2020 2021CB Insights,2022VCPEM&A200215.253.243.246.2114.93.32.912.283.175.8167.290.2$18,886$10,422$5,137$649$1,088$517$666North AmericaEuropeAsiaAfricaSouth AmericaMiddle EastOceaniaFinancing volume($m)North America512Europe251Asia196Mi

44、ddle East29Africa44South America31Oceania28Average annual growth rate makes fintech among the fastest-growing sectors worldwide25%Deloitte,2022Q1 2018Q2 2018Q3 2018Q4 2018Q1 2019Q2 2019Q3 2019Q4 2019Q1 2020Q2 2020Q3 2020Q4 2020Q1 2021Q2 2021Q3 2021Q4 2021Q1 2022Funding($bn)YoY changeR A C O N T E U

45、R.N E T03Commercial featurehe UK fi ntech market has been on a roll.In 2021,investment hit 27.59bn,a sevenfold increase on the 3.85bn achieved a year earlier,according to KPMGs Pulse of Fintech report.That was driven by record deal-making activity as fi ntechs bounced back from the pandemic.The tota

46、l number of M&A,private equity and venture capital transactions reached 601 last year,up from 470 in 2020,according to the report.“Weve been through a period of very strong growth,particularly coming out of Covid,”says John Hallsworth,partner and fi ntech co-lead at KPMG UK.“Theres been a lot of inv

47、estment activity as a vast amount of private capital has been looking to invest in emerging tech,and the move to digital has really helped accelerate that even more.”That period of expansion,however,has started to stall.The economic outlook is less buoyant,with the UK economy poised for slower growt

48、h in the months ahead.Interest rates are also on the rise,which may create challenges for some fi ntechs,says Hallsworth.“First of all,the cost of funding has gone up,”he says.“And secondly,the economic conditions mean that investors are more nervous about what they invest in and so its harder to at

49、tract investment.”Added to that,the regulatory backdrop continues to intensify.Areas such as cryp-tocurrency and buy now pay later are likely to face increased scrutiny,which will poten-tially temper growth in those markets.Yet those headwinds are not going to have a uniformly negative impact,with s

50、ome fi n-tech sub-sectors expected to fare better as market conditions become more challeng-ing to navigate.“The economic backdrop is going to sig-nifi cantly infl uence which fi ntech use cases are going to be supported,”says Joe Cassidy,partner and head of FS strategy at KPMG UK.“Fintech businesse

51、s that are non-discretion-ary are the ones that have the most chance of doing well in this environment,while those which are discretionary and are focused on B2C(business-to-consumer)activities may lag slightly behind.”So,make it obvious what that is.And have an eye looking to the future.Do you want

52、 an exit?Do you want to make acquisitions?What is it you want to do?QHow can fi ntechs be smarter about their fi nances?Fintech businesses at their very core are entrepreneurial,and develop-ment of the idea and technology is the pri-mary focus in the early years of the business.Often what is left be

53、hind,from lack of time or experience,is the day-to-day fi nances and tax position of the business.But not Ensuring fi ntech success through economic headwindsEconomic uncertainty creates opportunities and challenges for all businesses and fi ntechs are no exception.Fintechs can take advantage of thi

54、s environment by exploiting their fl exibility,responsiveness to customer needs and track record of innovation Sectors set for successThose sub-sectors that are likely to thrive in the current environment are regtech busi-nesses,cyber-related services,wealthtech fi rms and alternative fi nancing pro

55、viders that are helping funnel money towards small and medium-sized enterprises(SMEs).Regtech businesses are likely to benefi t given the broader regulatory backdrop and the hefty compliance burden fi nancial insti-tutions continue to face.Given the tighter labour market and rising compliance costs,

56、fi nancial institutions are increasingly looking to technology to manage regulatory change more effi ciently.“KYC(know your customer)and AML(anti-money laundering)responsibilities are increasing,not diminishing,so this is an area where we are seeing a lot of interest and a lot of competing companies

57、,some of which are extremely viable and investable as we go for-ward,”says Cassidy.Cybersecurity businesses are also going to be in demand,as many fi nancial institutions have expanded the perimeter of their organ-isations by enabling widespread remote working.In addition,increased cyber threats and

58、 fraud means digital surveillance needs to step up accordingly.The UKs Data Reform Bill and the emer-gence of an open fi nance framework are likely to favour wealthtech fi rms who will be able to access shared data on a customers entire fi nancial situation.Meanwhile,fi n-techs focused on providing

59、working capi-tal,trade fi nance and supply chain fi nance are also likely to benefi t given the growing fi nancial pressures on SMEs as economic conditions deteriorate.“There still remains a lot of capital to invest,”says Jeremy Welch,head of KPMG UKs fi nancial services deal advisory.“To start with

60、,were still transitioning to a digital future and therefore the sector remains attractive to investors investing for the long term.Theres also been an amelioration in valuationsa lot of people felt the market was getting frothy last year,so that may make investment slightly more attractive even if t

61、hat capital may be redirected to different sub-sectors.”A tighter grip on fi nancesWhile some sectors have the potential to thrive in the current climate,fi ntechs with strong attributes those that have untapped growth potential in new markets,or busi-nesses that are already profi table will continu

62、e to command premium valuations regardless of sector,says Welch.“In the more mature fi ntech sectors,theres going to be a fl ight to quality and established busi-nesses,which could trigger consolidation.”Investors are also going to be more focused on cash burn rates than absolute growth.For those bu

63、sinesses that might be more vulnerable to any economic downturn and that have been operating in an envi-ronment where previously there was a lot of cheap capital available,they are going to have to tighten their belts,says Welch.“They need to focus on what theyre spending money on,assess the effecti

64、ve-ness and cost of customer acquisition channels,and maybe cut back on some of the geographies that theyre trying to target or the sheer number of products theyre trying to launch,”he says.“Discretionary spend will be controlled and we have already seen a few contemplated layoffs and hiring freezes

65、.So cash will become more important.”There is one positive.Many fi ntechs have already raised ample capital and are coming into this period of uncertainty with rela-tively robust balance sheets.“Companies may have a high cash-burn rate,but its not like they have no cash available,”says Welch.Those f

66、i ntechs that have yet to reach profi tability and whose business models will potentially be more challenged by less Fintechs are facing increased challenges as economic growth slows.Co-leads of KPMG UKs fi ntech team Hannah Dobson and John Hallsworth discuss the steps fi ntech leaders should take t

67、o emerge from this period strongerbullish market conditions may be forced to reset their expectations.“Its inevitable during this stage of the cycle that theres a lot of early-stage disrup-tors who dont have the cash fl ow coming in but have got interesting intellectual property that they could try

68、to commercialise in other ways,”says Cassidy.Potential deal activityTo start with,fi ntechs could seek a broad range of M&A opportunities.One potential route is for large fi ntechs or those with the cash avail-able for acquisitions to bring in technology that is complementary to their existing busi-

69、ness.A second route is for venture capital or private equity fi rms to look at combining some of their portfolio companies to create a more rounded fi ntech proposition.Or another route is via traditional fi nancial institutions or advisory fi rms that could be interested in acquiring businesses tha

70、t enhance their exist-ing service offerings.Other options are also on the table,says Cassidy.“They could refi nance,they could give up some equity or they could part-ner,”he says.“Its all about how they feel in those circumstances.”Some fi ntechs may also pivot from offering B2C services to selling

71、directly to other busi-nesses,with business model pivots a feature of previous periods of economic turbulence.“We often see fi ntechs white labelling their technology and being used by big fi nancial institutions that dont have the ability to build their own,”says Hannah Dobson,fi ntech co-lead and

72、indirect tax partner at KPMG UK.In other cases,fi ntechs may apply their technology to another consumer market that is more in demand.Partnerships and joint ventures(JVs)between fi ntechs and tradi-tional fi nancial institutions are also an effec-tive way of commercialising valuable intellec-tual pr

73、operty developed by fi ntechs.“Fintechs who have already taken steps to identify,protect and optimise their intellec-tual property assets will fare better in part-nerships and JV arrangements,”says Usman Wahid,a technology law partner at KPMG UK.“Optimisation of intellectual property,in particular,s

74、hould enable fi ntechs to effec-tively segment their IP for use in partnerships and JVs without weakening their standalone core business.”Solving for bigger problemsGovernment efforts to supercharge the fi n-tech industry may also create new oppor-tunities for existing businesses to pivot or enter n

75、ew markets.For example,the Kalifa Review of the UK fi ntech industry which KPMG made signifi cant contributions towards,with KPMG UKs vice chair of fi nan-cial services Kay Swinburne co-chairing the policy and regulation chapter is designed to encourage more innovation and make the industry more inv

76、estable.In this more testing environment,there is also an opportunity for fi rms to think more ambitiously about how they can develop as the market matures.“A lot of the fi ntech world today is focused on niches rather than necessarily solving end-to-end problems,”says Hallsworth.“Theres an opportun

77、ity in this environment for fi ntechs to think bigger and try to solve some of the big problems on an end-to-end basis and by doing it in a col-laborative way.”Ultimately,the key to remaining successful in the period ahead will not only hinge on the value and utility of a fi rms technology,it will a

78、lso rely on the quality of the people running the business.“The fi ntechs that will stand out from the crowd if we enter into diffi cult times will be the ones that have a unique product thats solving a problem,”says Dobson.“But its also important to have a really good management team who can antici

79、pate problems and then prepare for these accordingly.Invest in really good people to run your business and your business will survive.”For more information,visit home.kpmg/uk/en/Fintechpaying attention to those fi nances will take you under if youre not careful.If you run out of money,or if you end

80、up with a signifi cant unexpected VAT bill,it will be more challeng-ing to attract investment.There are many government schemes that can support technology businesses.You can claim R&D tax relief,and there are things like Patent Box,which can reduce your cor-porate tax rate down to 10%.Fintechs ofte

81、n dont properly consider their VAT position.They cannot generally reclaim VAT on all their costs and this may either not be realised,or those costs are 20%more expensive than predicted by the business.This is signifi cant when cash is so important in the early years of a fi ntech.QWhat upcoming regu

82、lations should fi ntechs be looking to get on top of?The regulatory environment can be stimulative for fi ntechs.There are some specifi c areas in the market which will be brought into the regulatory enve-lope such as crypto and buy now pay later.If youre a credible,regulated business,then youre goi

83、ng to watch both of those markets shake out quickly,and so the more credible businesses can capitalise on that position.Another enabling regulation is the data reform bill,which will effectively expand open banking to become open fi nance.Open banking has been a real benefi t for fi n-techs because

84、you can leverage the data in banks and create new propositions.Now as it grows to become open fi nance,the abil-ity for fi ntechs to add value to the end con-sumer becomes much greater.QWhat should fi ntechs be doing to retain and attract the best talent?People want to go and work with the larger we

85、ll-known fi ntechs because of the name and because of who they are.But sometimes they get through the door,and they fi nd that fi ntechs have a lot of growing up to do in terms of retention and HR skills.If theyre going to keep the really talented people that are attracted to go and work there,they

86、have to do things slightly differently.Fintechs may also need to rethink other incentives.For example,the assumption that equity prices will increase stands to be challenged in light of recent economic head-winds.Therefore,fi ntech companies need to assess how effective their incentives are against

87、a potential new reality,in particular where companies have offered share options or growth shares which may now not appear as attractive.Reassessing this is a sensible step for all fi ntechs,alongside a review of their tax effectiveness on the basis that cap-ital gains tax rates continue to be signi

88、fi cantly lower than tax on employment income.QHow should fi ntechs be approaching fundraising in the current environment?If you turn the clock back probably three or four years,fundraising for fi ntechs was very similar to the dot-com boom.Investors have been very enthusias-tic about backing anythi

89、ng fi ntech-related.But then the world paused and said what are we actually investing in?Above all,they are investing in the people.Then they look at how the business is going to turn a profi t.So at what point is it going to stop burning through cash?And then,fi nally,wheres the business going to e

90、nd up?Is it easy to copy?Theres also a maturing in the way that big fi nancial institutions are looking at fi ntechs.A few of the major banks are put-ting in what we would call demand equity investing in a fi ntech and then routing busi-ness through it,increasing its value.That model is becoming mor

91、e prevalent and we can expect more of that,especially in these times where valuations have come down.In the more mature fi ntech sectors,theres going to be a fl ight to quality and established businesses,which could trigger consolidationFintechs often dont properly consider their VAT position.They c

92、annot generally reclaim VAT on all their costs and this may either not be realised,or those costs are 20%more expensive than predicted by the businessQ&AQWhat should fi ntechs be doing now to future-proof themselves?Have the right structure in place from the outset.That means keeping it simple,dont

93、over-complicate what your business is doing.Protect your core business which for most fi ntechs is their technology.Put yourself in the best position for fundrais-ing by getting the basics right so investors focus on investing in your business rather than being concerned about the contents of dilige

94、nce reports.Investors want to invest in the people(the founders),and they want to invest in a brilliant idea that solves a problem.Navigating tougher timesTHDHDJHHDHDJHF U T U R E O F F I N T EC H04Are your assets fit for the digital age?The digitisation of goods and assets will be a once-in-a-gener

95、ation evolution in finance with transformational impacts,but first companies must overcome challenges of interoperabilityor most people who are aware of blockchain,it is viewed as the technology behind bitcoin,just one of many digital currencies traded by consumers and,increasingly,as an asset class

96、 finding its way into fund manager portfolios.Or,perhaps they know about NFTs,the digital pieces of art which are commanding price tags in the millions.Though blockchain is a complex technol-ogy,the premise is simple:fusing the real and virtual worlds to create digital assets,or tokens,through a pro

97、cess of tokenisa-tion.And while cryptocurrencies and NFTs steal most of the headlines,innovative companies are quietly utilising tokenisation to reimagine finance as we know it.“What were seeing today is the result of the push 30 years ago into electronic finance and payments.Now were moving into th

98、e next generation,which is digital,”says Gilbert Verdian,CEO and founder of Quant,which unlocks the power of block-chain through interoperable ecosystems and real-world solutions.“Tokenisation allows us to embed logic,controls and pro-grammability into how we transact between parties for the first t

99、ime.“The digitisation of assets and money,such as with regulated stablecoins or a central bank digital currency,will let us automate complex checks and balances on the buyer end and receiver end.We can become more operationally efficient and creative with how we transact with money,and do things tha

100、t weve never done before.”The potential applications are vast,but the common thread is enhanced trust and auditability from tracing the entire his-tory and provenance of assets and goods,thereby removing intermediaries.Car buyers,for example,can be assured of a vehicles history,including accidents a

101、nd repairs,and that its components are legit-imate and were created sustainably.House buyers can get into homes quicker as own-ership history,events and searches are available instantly on the blockchain,and make easy payment via smart contracts.By powering end-to-end visibility of trade,digital twi

102、ns unique block-chain-based tokens linked to real-world physical objects or identities could optimise global supply chains to prevent costly disruptions,as experienced during the Covid pandemic.Crucially,consumers could finally get better ownership of their privacy and identity in the digital age,co

103、n-trolling exactly who can see their data and how they can use it.“Weve all made the mistake of giving up our privacy by trusting companies to pro-tect it,but theyve failed consumers and the market because of the cybersecurity sectors struggles to secure our data,”says Verdian.“Digital assets will g

104、ive control back to the consumer.Tokenisation will also enable us to protect intellectual property for the first time,wrapping it as a digital asset and deciding who can consume,rent,transfer,sell or access an asset or good.”These opportunities are undoubtedly exciting,but there is one major barrier

105、 standing in the way:interoperability.When digital assets are created,they can typically only be used on a single system or network,limiting their global capability.This is akin to buying a mobile phone with a Vodafone SIM and then only being able to call other people on the Vodafone network.Its a h

106、uge barrier preventing the true power of blockchain from being unleashed.As the worlds first provider of true uni-versal interoperability,Quant is accelerat-ing a new generation of finance by radically simplifying the process of tokenisation for developers and financial institutions,unlocking the ca

107、pability for digital assets to travel across all networks.“Our interoperability effectively allows money,assets and transactions to roam in the same way that your mobile phone roams,”says Verdian.“This is just the beginning.Most big financial services insti-tutions are setting out a two-to-three-yea

108、r strategy to digitise every type of instru-ment,asset,stock and security to benefit from tokenisation.”The momentum is growing and the driver is obvious:savvy investors the world over are increasingly demanding that their wealth managers tokenise assets in their portfolio into new digital assets to

109、 gain access to new markets and liquidity.The impact on finance will be transformational.For more information,visit workF Our interoperability effectively allows money,assets and transactions to roam in the same way that your mobile phone roamsGet ready for the dropA significant number of fintech st

110、artups and scaleups are either making redundancies or introducing hiring freezes.What does it all mean?he fintech bubble of the past few years is starting to burst.After explosive growth and the sky-high valuations of recent times,a signifi-cant number of startups and scaleups are either making layo

111、ffs or introducing hiring freezes.Examples here include US-based com-mission-free stock trading app provider Robinhood,which has slashed headcount by 9%.The Swedish buy-now-pay-later(BNPL)unicorn Klarna has pointed to job cuts of up to 10%.US-based cryptocurrency exchange platform vendor Coinbase ha

112、s put an indefinite hold on recruitment and rescinded job offers.But according to Tom Chambers,associ-ate director of technology and growth at recruitment consultancy Robert Walters,the situation for a significant number of tech firms across Europe and not just those in the fintech space is even wor

113、se.He describes the cuts as being “pretty brutal”,with many laying off up to 50%of their workforce.“Over the last 18 months,from the fourth quarter of 2020 until last month,we saw a massive tech hiring bubble,as scaling businesses benefited from the investment bubble,”he says.“People overhired to me

114、et the goals set by venture capitalists(VCs)and to improve their valuations because the more people they hired,the more their value went up.”But the blame cannot be laid solely at the door of VCs,says Kevin Chong,co-head of fintech specialist Outward VC.He points to the role of hedge funds which,on

115、finding it difficult to outperform the mar-kets a few years ago,turned their attention to private companies.Traditionally,their investment strategy had focused almost entirely on public markets.“They reformed the market,”he says.“It was more important to them to invest large sums than to get bogged

116、down with valuations,as they had to find ways to com-pete against VCs.”The problem now,though,is that while money is still available,that market is becoming more risk-averse.This means funding is becoming less easy to access and rounds less frequent.The situation is particularly difficult in consume

117、r-focused markets,such as BNPL and home lending,and among scaleups that have yet to turn a profit despite years of investment.“Investors are doing more due diligence and the valuations of fintechs arent soar-ing as they have over the last five years,”Chambers explains.“Startups are being held to hig

118、her standards on revenues and profits,and some founders could be thinking twice when getting their ducks in order.”The reason behind this shift,says David Ritter,director of financial services strategy at digital transformation consul-tancy CI&T,is a toxic combination of quan-titative tightening,par

119、ticularly in the US,rising interest rates,high levels of inflation and growing fears of a global recession.Such factors are inevitably making investors wary.But they are also causing founders to look at how they can save money to ensure they dont run out prema-turely.And headcount is,of course,an ob

120、vious place to start.“Cash is king and it will be important to see companies through this difficult period,”Chong says.“Because funding is now much less predictable,founders want to extend the runway for as long as possible.Were talking about rainy days and we could see two years of that.”A key fact

121、or here,he believes,is that the it was 10%down on the all-time high expe-rienced in Q3 last year.What this means,though,says Ritter,is that the current situation is more of a market correction than a radical contraction.“If you think about the dotcom bust of the late 1990s,there were thousands of st

122、artups with business models that didnt make sense and werent making any money,”he says.“So the resulting shake-out was healthy for the long-term develop-ment of the sector by creating a more balanced environment,and the same is likely here too.”Chong agrees.Not least because he now expects the inves

123、tment focus to“spread around a bit more”from a handful of later-stage companies towards a wider variety of early-stage startups.Another advantage of this correction,meanwhile,is that salaries are likely to fall back to realistic levels,believes Cham-bers.Over the past 18 months they had become hugel

124、y inflated because of start-ups“paying even more competitive sala-ries than large enterprises”.But todays uncertain times mean there will be a shift away from startups towards more stable,well-established businesses,particularly in the wider financial services sector,Chambers forecasts.Some fintech

125、employees could well find themselves going down this route whether they want to or not,due to anticipated high levels of merger and acquisition activity.This situation is particularly likely among fintechs that have been unable to diversify beyond their core product or service.“If youre an incumbent

126、 financial servic-es player,such as a big bank,itll be a great time to make an acquisition as valuations are already down quite a bit on a year ago,”Chong explains.“Itll certainly make the trade-off between buying and building technology yourself much clearer.”As a result he predicts that,although t

127、his year and next year are likely to prove difficult,the fintech sector should pick up again in 2024.Moreover,he believes that for the ecosystem overall,the current correction will be positive.Ritter agrees.“Itll be challenging in the short and medium term.But the long-term future for fintech remain

128、s bright,”he says.widely predicted,quick,post-pandemic,V-shaped recovery is looking increasingly unlikely,which is leading experienced founders and investors alike to act.“The bubble is bursting,”Chambers points out.“It will definitely get worse before it gets better because we are not at the bottom

129、 yet.”Cath Everett Founders want to extend the runway for as long as possible.Were talking about rainy days and we could see two years of thatWHICH UK FINTECHS ARE DOING WELL?Ranking of mega deals in the UK fintech sector in the first half of 2021($m)AT T R I T I O NTCommercial featuremonkeybusiness

130、images via iStockCentre for Finance,Technology and Entrepreneurship,2021SaltPay CStarling BankB(2nd round)RapydSmart PensionClearScore10 x Future TechnologiesPPRO FinancialDNA PaymentsAlthough technology companies of all stripes are being impacted by the situa-tion,the huge sums invested in the fint

131、ech space due to its disruptive promise and global potential has put it particularly under the spotlight.Dealrooms The State of Fintech Q1 2022 Report revealed,for instance,that startups raised$125bn(101bn)in VC funding last year.The figure is 2.8 times higher than in 2020,bringing the total enterpr

132、ise value to$3.5tn,an increase of 6.2 times on 2016.Even during Q1 2022,when economic headwinds started to become more visible,fintechs still raised$32.4bn,up 27%year-on-year according to Dealroom,although PaymentsPaymentsChallenger bankDigital assetsPaymentsPersonal FinancePersonal FinanceEnterpris

133、e softwarePaymentsPaymentsCOMPANYSECTOR500450376300300230200187180140Print media cant generate leads.Wrong.Wrong.Some of the advertisers in this report will generate over 200 leads thanks to Raconteurs integrated print and digital campaigns.Email to find out more.R A C O N T E U R.N E T05Walk the al

134、l-important environmental talkustainability has become the talk of the C-suite,but fintech compa-nies arent as good at addressing the environmental aspect of ESG as they are the social and governance.Fintech firms are far more likely to pro-mote diversity and offer mental health sup-port than have a

135、 net zero carbon plan in place.This is according to research by ESG_VC,a UK industry initiative backed by ven-ture capitalists that highlights the ESG challenges faced by early-stage businesses.Fifty-seven per cent of fintech startups scored one out of four stars for environmen-tal metrics,while 36%

136、earnt two stars.The other 7%were rated three out of four.For comparison,11%scored one star on social metrics with 32%scoring two.For-ty-seven per cent received three stars and the rest four.As for governance metrics,only around a quarter were marked one or two stars.Fifty-eight received three stars

137、while 16%were awarded full marks.Overall,fintech companies perform far worse when it comes to the E in ESG than their startup counterparts in ecommerce,software-as-a-service and manufacturing.A major reason environmental metrics arent on the radar of many fintechs is because the resources required a

138、re typical-ly directed towards other core functions such as business development,marketing and research,says Carlo Maria Cap,CEO at global management consultancy,BIP.“Given their size and the nature of the industry,they tend not to be heavy emit-ters,so environmental impact may not be considered a s

139、trategic focus,”he adds.Fintech founders might also be deterred from ploughing time and effort into ESG by the technical jargon and the perceived complex processes used to capture data.“It can be challenging for fintechs to get a handle on environmental metrics and reporting because,after all,ESG is

140、 funda-mentally about data gathering and report-ing it in a structured way,”says Faith Frank,head of ESG and social impact at Payoneer.The cross-border digital payment services provider is a public company that is scaling globally and has put in place the infra-structure to capture ESG metrics from

141、country to country.One of the key questions facing fintech startups is how to track the carbon footprint of their products and services when theyre“not as tangible as a manufacturers or food companys”,Frank adds.“Whats the envi-ronmental impact of a payment?”she asks.“The supply chain for most finte

142、chs is almost entirely digital.Their staff are often remote or partly remote,and their product or service is often hosted on the cloud,”says Manuel Antunes,venture investment manager at Triple Point,a purpose-driven early-stage venture capital firm.Its portfo-lio includes Credit Kudos,which was acqu

143、ired by Apple earlier this year for a reported$150m(122m).“Of course,delivering a product or ser-vice via the cloud does come with an energy cost its just less visible.”There are steps fintechs can take to address the E in ESG.These include using a carbon-offsetting platform to balance their footpri

144、nt and at the same time make a pledge to reduce emissions.They can also work with partners that are committed to decreasing fossil fuel financing.Another way in which fintechs can reduce their environmental impact is by choosing suppliers and vendors that are socially responsible by screening them f

145、or their own sustainable practices.Globally,measuring environmental met-rics is still largely optional.This has meant that fintechs can struggle to understand what data is available and relevant and how it should be captured.Frank points out that if fintechs are unable to build the capacity The envi

146、ronmental element of ESG isnt necessarily on firms radar because it can be difficult to measure the carbon footprint of a paymentin-house,they should engage an external organisation that can assist them in the measuring and reporting.Things are beginning to change.As of 6 April this year,1,300 of th

147、e largest UK-registered companies and financial institutions are subject to TCFD(Task Force on Climate-related Financial Disclo-sures)reporting.When ESG reporting becomes mandatory for companies of all sizes,it should become clearer to fintechs how they should be measuring environ-mental metrics.Thi

148、s will be a good thing.Not only does reporting accurate data help to guide inter-nal efforts,but transparency is key in win-ning the trust of external stakeholders.Itll also be crucial for securing future funding.The research from ESG_VC shows that startups tend to become slightly better at addressi

149、ng the environmental aspect of ESG the more funding that they raise.Fourteen per cent of series A companies scored three out of four stars compared to 20%for those that had gone through at least a series C round.This suggests that investors are playing a part in bringing about change.And an area tha

150、t investors are increasingly interested in is climate fintech those startups that are keen to drive the green economy.Venture capitalists invested$1.2bn in the cross-cutting sector in 2021,according to CommerzVentures.Carbon accounting and climate risk management were the two sub-sectors that drew i

151、n the most money,with$410m and$304m respectively.Novus is a climate fintech and the UKs first B Corp-certified sustainable neobank.It donates a portion of fees collected from transactions made on its debit cards to green causes.It has also embedded indirect carbon emission data into its app so that

152、users can conveniently monitor their spendings footprint.“Investors are consistently looking for solutions to fill unmet needs in the mar-ket,”says Novus co-founder and chief growth officer Shruti Rai.A solution which addresses an environmental challenge,while demonstrating a monetisation strate-gy,

153、generally wins the race for funding.“It doesnt matter how attractive or for-ward-thinking a climate fintech is,though,investors will want to see beyond the brand and are looking at the people behind it,”Rai stresses.“Investment in the right people is critical.”Frank agrees:“Getting the data right is

154、 one thing.“But equally important is having engaged leadership and employees.ESG is about a companys impact,and thats something that touches everyone who works there.”Rich McEachranS U S TA I N A B I L I T YSCommercial featureHOW FINTECH PERFORMS ON THE ESG FRONTPercentage of VC-backed fintech firms

155、 who scored 1-4 stars according to ESG_VCs benchmarking system,which learns from SASB,the UN SDGs and B Corp rankings Given their size and the nature of the industry,they tend not to be heavy emitters.Environmental impact may not be a strategic focusDougal Waters via GettyImagesESG_VC,2022ESG1 star2

156、 star3 star4 star57%36%7%32%47%11%11%16%58%16%11%Embracing embedded payments full potential Embedded payments can transform the way business is done.Here co-CEOs of Enfuce,Denise Johansson and Monika Liikamaa,tell us why they believe its time for this fi ntech innovation to get full credit and expla

157、in how diversity can drive the industry forwardFintech is traditionally domi-nated by men,but Enfuce leads the way with two female co-CEOs.How is diversity moving the industry forward?Its all about having role models.For those growing up today,you want to see that,as a female,you can be a bank CEO o

158、r head a fi nan-cial start-up or challenger.But its bigger than that too;its about deliv-ering diversity of all kinds.The mindset should be anyone can become any-thing.Monika and I,as female found-ers in fi nance,want to support and encourage everyone and show there are no limitations.By encouraging

159、 and ensuring diversity among fi ntech lead-ers from all different backgrounds and different parts of the world,you gain diversity of thinking to create new ser-vices that solve new problems across the industry.Why are embedded payments so important?Anyone who generates trans-actions at some level w

160、ill need to use embedded payments if they want to provide a great service in the future.Funds move directly between the two parties digitally without needing a plastic card.The service provider can either choose to give the transaction insight and reve-nue to other third parties,or take this opportu

161、nity to own their trans-action fl ows and reduce the fees they pay.What problems will embedded payments go on to solve?Mobility is a growing area.For example,a single app could allow tourists to access all the various pay-ment methods and apps now needed to travel in cities on trains,tubes,metros,an

162、d buses or to pay for electric charging and parking spaces if in a car.Embedded payments would link into all these individual services and users then pay from one place via top-up credit.What are the key challenges right now for embedded payments?This technology is now a hot topic within fi ntech;it

163、s not a buzzword.As more digital services are developed,this method offers a user-friendly,accessible,and attractive proposition for transacting.Originally fi ntech was just expense management and lending and then came the digital banks.Now we have the likes of mobil-ity,crypto,and payroll tech,plus

164、 many more emerging verticals,and those working within these might not have an extensive background in the traditional fi nancial industry.If embedded pay-ment technology is the right direction for them,partnering with a service pro-vider might be the better option rather than developing this area t

165、hemselves.How do you see embedded payments developing over the next fi ve years?Sustainability will have a huge infl uence.We are going to own less and rent more,from cars to clothes,and embedded payments will be central to pay for those services quickly and easily.This method is also becoming vital

166、 within developing coun-tries where populations are skipping the traditional evolution from cash to plastic payment cards.They are moving straight to digital wallets and embed-ded payments because as telco infra-structure improves,more apps are launched,and digital embedded pay-ments become the norm

167、.What advice do you have for business leaders looking to adopt embedded payments?It is important to work with a com-pany who puts your business goals at the centre of any suggested solution.Usability is what its all about;reducing the clicks to make a payment,and most companies wont have the dedicat

168、ed knowledge or technical skills.It is also critical to ensure all payments are com-pliant with local and international laws and regulations to protect the business and its end users.A trusted partner has this expertise,allowing leaders to stick to their core business and not need to be experts them

169、selves.For more information please visit payments full potential Embedded payments can transform the way business is done.Here co-CEOs of Enfuce,Denise Johansson and Monika,tell us why they believe its time for this fi ntech innovation to get full credit and explain how diversity can drive the indus

170、try forwardF U T U R E O F F I N T EC H06inancial services operators were,according to ServiceNows Keith Pearson,“the white knights of the pandemic”.They came to the rescue of people and businesses stricken by the fallout of the coronavirus crisis.But,with the global economy in peril,they must saddl

171、e up again.And yet,despite being saviours for many in the last two-and-a-half years,there is an incredible demand for banks,in particular,to evolve rapidly and offer personalised services and an omnichannel customer experience to rival the best in other industries.To gallop along with change,steer c

172、lear of disruption,and continue to fight the good fight,those wishing to lead the way in the future of banking must partner with fintech experts,argues Pearson,AVP of financial services indus-try go to market at ServiceNow.He points to a recent Gartner report,2022 CIO Agenda:A Banking and Investment

173、 Perspective,which cap-tures the challenge.“We are in a time of indefinite volatility,making it dif-ficult for banks to plan for an indefi-nite future,”it reads.“Mastering busi-ness composability prepares banks to maximise business value regardless of ongoing uncertainty.”Fay Wood,head of retail str

174、ategy at Natwest,sets the scene.“There is a looming cost-of-living crisis after unprecedented events a global pan-demic and a war in Europe that few would have predicted three years ago,”she says.“Money management and supporting customers with budgeting and financial tools will be critical for the i

175、ndustry.As a result,these services are becoming much more embedded in peoples lives.”Increased duty of careConcurrently,regulators argue there is a greater responsibility on regu-lated firms to hold customers hands,metaphorically,and support them.Interestingly,some new financial ter-rains,whether it

176、s cryptocurrencies or buy now,pay later products,for instance,are not yet regulated.Indeed,the Financial Conduct Authoritys final regulations on its new Consumer Duty will be available at the end of July and,following consultation,appear likely to force regulated firms to deliver“the best outcomes”f

177、or retail clients,says Wood.As an example of how NatWest better educates cus-tomers,the recently acquired Rooster Money app,with a pre-paid pock-et-money card for those aged three and up,is currently free to access for the banks 17 million customers.“We wanted to do more for children,”she adds,highl

178、ighting the role acquisition is playing in the future of banking.Metro Banks David Thomasson,man-aging director of digital and products,concurs that banks have to support cus-tomers better,whether online or offline,and build on the trust generated in the last two-and-a-half years.“Now,more so than b

179、efore,they need to talk to somebody at the bank,”he says.“While digital is clearly becoming more impor-tant,seeing someone face to face is also vital.Our data shows that customers might not use a Metro Bank store for two months or even two years,but knowing that there is someone in a trusted envi-ro

180、nment nearby who can speak to you at a time that suits you is crucial.”It is not just individuals who crave that support.Thomasson states that 80%of Metro Banks business custom-ers gained since the start of the pan-demic operate within an eight-mile radius of a branch.“This shows the importance of t

181、he bank within a com-munity,”he continues.“A service-led proposition and being there for com-munities will differentiate financial ser-vices organisations going forward.”Banking in the metaverseThe“big difference”identified by Nadya Hijazi,global head of whole-sale digital channels at HSBC,is that b

182、anks have to go to customers,not vice versa.In March,HSBC revealed it had bought a plot of virtual real estate in The Sandbox,an online gaming space,marking the banks first significant foray into the metaverse.She says:“Its about ensuring your services are avail-able wherever your customer wants to

183、be,whether thats in the metaverse or using WeChat in China.You must embed your services and be at the heart of the community.”Banks cant afford to ease up on innovation,and a mindset change is required to develop products and ser-vices that dont need to be fixed,per se,Hijazi warns.“When youve got a

184、 revenue stream,there is no driver for change,”she says.“Usually,things change because something is not working.But now its dangerous to be complacent because if you dont keep improving,then you will lose connec-tivity with customers.”This concept chimes with Jasmeet Narang,chief transformation offi

185、cer and head of operations at Santander UK.“Customers want choice and con-venience,not just a load of off-the-shelf products,”he says.“The old stack-them-high and sell-them-cheap approach doesnt work anymore.Instead,you have to understand cus-tomer needs,and most critically,you have to have that hum

186、an touch.”He stresses the importance of col-laborating across the business and“organising design around the cus-tomer”,using their predicted wants and requirements as the guiding star,and justification,for any innovation.“Otherwise,youll always function in silos.”However,humans must be involved in t

187、he service,whatever tech-nology is used.“It is those touch points with customers that are gold dust and will define the winners and the losers in the future of banking.”Culture conundrum and composability Narang says leaders have to activate a cultural change to drive innovation.“Top-down sponsorshi

188、p is essential,”he adds.“Once you have that and a clear,long-term structure,other things follow.Also,you have got to be true to your convictions.The world will throw pandemics and wars at you,and at times you might have to be agile and flexible,but those that will succeed will keep the overall desti

189、nation in mind.”Yorkshire Building Societys chief commercial officer,David Morris,believes the“evolution of banking dis-tribution models is going to have quite pronounced effects,whether thats embedded finance or banking in the metaverse,among many examples.New entrants,whether challenger banks or t

190、echnology companies,will find ways of competing in the value chain in differ-ent ways.Therefore,thats going to have big implications for business models.”He continues:“How do you make sure youre not left behind or not investing in the wrong technology?And how do you build that in an environment wher

191、e you have to handle legacy infrastruc-ture,macroeconomic uncertainty,and evolving regulations?Running an enter-prise and building something differ-ent is incredibly difficult,and requires careful prioritisation and creative solu-tion design.”ServiceNows Pearson counters that bold banking leaders wh

192、o look to part-ner with fintechs,use the agility of the cloud,and are willing to rip up old plans will triumph.“You must be prepared to think differently about your organisa-tions structure and operating model and follow that through with your tech-nology investment.”He suggests the quicker banks ca

193、n focus on building“composability”essentially,a system design principle that deals with the interoperability of components at scale,the better.“Thats what the future of banking will look and feel like,”Pearson concludes.To find out how ServiceNow can enable digital transformation and improve experie

194、nces in your organisation,visit of banking:what next-generation operating models are required?Composability,partnerships with fintechs,and meeting customers on their preferred channel are all vital,according to a roundtable of expertsF You must be prepared to think differently about your organisatio

195、ns structure and operating model and follow that through with your technology investmentRoundtable attendeesNadya Hijazi Global head of wholesale digital channels,HSBCDavid Morris Chief commercial officer,Yorkshire Building SocietyJasmeet Narang Chief transformation officer and head of operations,Sa

196、ntanderKeith Pearson AVP,financial services industry go to market,ServiceNow David Thomasson Managing director of digital and products,Metro BankFay Wood Head of retail strategy,NatwestOliver PickupCommercial featureBanks need to cash in on plug-and-play providersBanks can connect to fintech provide

197、rs over the cloud in days or weeks.So why are they so slow to take advantage?eeping up with banking can feel like trying to watch a Star Wars spin-off with too many characters.The latest cohort of fintech innovators includes Ordo,Kasko,Mantl,Kani and Tuum(respectively a payment processor,product dis

198、tributor,customer onboarder,reconciliation specialist,and a core bank-ing provider).The ecosystem is bulging with startups with colourful names but a similar prem-ise:offering a cloud-hosted service,con-nected via an API,to offer something the bank cant build internally.BioCatch is a great example.I

199、t monitors behavioural patterns to distinguish between users and criminals.In the UK,reported losses to fraud amounted to 754m in the first half of 2021,a rise of more than a quarter,so banks are keen to explore any tech they can find.BioCatch is thus boom-ing,signing up 62 customers that include Ba

200、rclays,Citi Ventures and HSBC.BioCatch is cloud-hosted,so there is nothing for the banks to run or maintain.They simply con-nect via an API.If banks need to,they can outsource every aspect of operations.Options include Thought Machine for the core operating system,Jumio for AI verification,Fin-techO

201、S for the onboarding interface,Feedzai for fraud detection and so on.A sys-tems integrator such as Synpulse or GFT will build the entire thing if needed.It has led to an analogy with Lego.The parts snap together.If a block isnt working well,rip it out and replace.The challenge for the industry is to

202、 assess how well this works in practice.Investments in fintech average$170bn(135bn)a year.If banks are offered services but are reluctant to experiment with plug-and-play providers,then a lot of that VC cash will be wasted.The speed of adoption can be exaggerat-ed.“The actual connectivity is straigh

203、tfor-ward,”says Michael Mueller,CEO of Form3,one of the most high-profile cloud-native payment processors for banks such as Lloyds,Barclays and N26.“We have had cli-ents who received access to our API in the morning,and they managed to get connect-ed in the afternoon.”Yet the timeline is considerabl

204、y longer.“Banks are probably as conservative as theyve ever been,”Mueller says.“But that conservatism is not necessarily rooted in the bank itself,but in the environment that they are operating in.All our bank custom-ers must adhere to strict security,certifica-tion and audit criteria.There is no ti

205、me for risk when dealing with payments that drive the global economy.”Delays can be frustrating to fintech pro-viders,who are keen to connect to banks as fast as possible.Ivan Maryasin,co-founder and CEO of Monite,a Ber-Charles Orton-Joneslin-based provider of embedded finance systems to banks,confi

206、rms there are seri-ous delays.“The typical experience for most fin-techs is for a deal with a bank to take 12 to 18 months for something that the deci-sion-maker already approved to material-ise,”he says.“There are all kinds of additional steps such as due diligence,legal compliance,and the list goe

207、s on.”Often,its just about dealing with bureaucracy,according to Maryasin:“Cur-rently,it feels there are thousands of unnecessary steps in that process and peo-ple from all sorts of departments become involved,even if they will later have noth-ing to do with the service.“In the worst case,it prevent

208、s them from improving the service.At best,it massively slows integration.”Neobanks are faster in connecting to third-party services,proving how much tra-ditional banks could improve their perfor-mance.“Neobanks are close to the Lego concept theyre built from composable blocks and use a lot of their

209、infrastructure as a service.And this gives the opportunity to grow very fast and surpass traditional banks,”Maryasin observes.Three things may accelerate the rate of adoption of new cloud-hosted services.The competition from fast-moving neobanks is prime.The regulators are increasingly com-fortable

210、with cloud-hosted innovation.And then there is the maturity of banks in deal-ing with API-connected services this model is the new normal.“Banking is becoming more experimen-tal,but were still in the early stages,”says Iana Dimitrova,CEO of OpenPayd,which offers banking and payments via an API.“The

211、real experimentation and innovation will come in the next few years.”Dimitrova is optimistic that the poten-tial exists for truly rapid iteration.“Bank-ing-as-a-service providers really can connect their clients in a matter of days,”she says.“I would compare banking tech-nology to electricity.A hund

212、red years ago,if you wanted a light bulb in your house it took a team of workers to install all the wir-ing,sockets,connections and bulbs you needed.Today,though,an electrician can do the same job in under an hour;every component and process has been standard-ised.This is the change that banking has

213、 gone through in the last decade.”Ultimately,the rise of plug and play for banking will reshape what it means to be a bank.We are on the cusp of true composa-bility,where an entire organisation is com-posed of third-party services,with all parts able to be switched out.When Banca Medio-lanum Group l

214、aunched Flowe,a new digi-tal-only bank for younger customers,it did so using a composable banking structure.It went live in just five months and attracted 600,000 customers in its first half year.Varo Bank,another tech-first digital bank in the US,claims to run at 25%of the cost of a traditional ban

215、k.It attracted four million customers in its first 13 months.Banking is awash with brilliant new ser-vices,from core banking and payments to AI fraud detection and automated ID.The challenge for banks is to accelerate the adoption cycle to make the most of these opportunities.There is a galaxy of in

216、nova-tion out there just waiting to be explored.If banks are offered services but are reluctant to experiment with plug-and-play providers,a lot of venture capital cash will be wastedWHO IS EMBRACING PLUG AND PLAY?Delivery of different digital banking capabilities among financial services providers

217、worldwide,by methodO P E N B A N K I N GK754mtotal reported losses to fraud in the UK in H1Sopra Banking and Forrester Research,2021UK FinanceSen via UnsplashIntegration and data exchange with third partiesOpen finance APIs offered via a developer portalInternal capabilities offered as a service to

218、third partiesEstablishment of platform or marketplace business modelsImprovement of customer onboarding and KYCRegulatory reportingOpen banking complianceEnhanced credit scoring0%10%20%30%40%50%Build ourselvesAugment our services with a third partySource exclusively from a third partyR A C O N T E U

219、 R.N E T07Levelling up the gender imbalance New research shows that women are reaching retirement age with the biggest pension savings gaps on record.A new wave of fintech startups aims to change that by helping women to become more financially awareow in her 50s,womens wealth coach and former banke

220、r Kim Uzzell had her two children in the 1990s.This prompted her to stop the pay-ments she was contributing to her retire-ment fund.Having the money to pay for more urgent needs such as childcare became more important than her own future.Its a cycle that mirrors the life events that create and ampli

221、fy the gender pay gap.But Uzzell warns that the gender pension gap the difference between the financial security men and women respectively have on retirement is far worse.“A 10%pay gap in the UK is shocking enough.But nobody is talking about the fact that the pension gap is 43%.Were addressing one

222、part of the jigsaw but the pension gap is incredibly wide.And it isnt moving in the right direction because the gap is so big,”Uzzell states.“Weve left it so late that theres a good chance that one half of a relationship can afford to give up work when they reach retirement age,and the other half th

223、en has to either become financially dependent or to carry on working.”New research commissioned by NOW:Pensions reveals that women are reaching retirement age with the biggest pension savings gaps on record.The average woman in her mid-60s will have a pension pot of 69,000,while an average man of th

224、e same age will have accumulated pension savings of 205,800.Women would have to work an additional 18 years,full time,to reach this amount,according to NOW:Pensions.A new wave of fintech startups could help to change this,though,by making women more financially aware and confident in decision-making

225、.Financielle and Smart-purse are educational and coaching plat-forms that aim to increase womens financial knowledge.Half of UK women would choose to invest through an online platform or website,according to insights from financial advice provider Fidelity.The ability to get regular updates on their

226、 investments is the main motivator for 27%,while 19%say that regular nudges and reminders are a key benefit of managing their investments online.But these apps and websites aim to do more than repackage finance for a female market.For Olga Miller,a former Swiss banker who co-founded Smartpurse in 20

227、19,its a chance to redress the biggest gender inequality issues that have plagued the wider finance sector for years.Fintech startups are purposeful and agile about hiring female financial advisers,who are lacking in mainstream banking which alienates women from finance and taking personal responsib

228、ility,according to Mill-er.Smartpurses own research shows that 54%of UK women rate their financial plan-ning for retirement as poor.“There are too few women in key roles in financial services.But even if you receive applications predominantly from men,the women are there but it just takes double the

229、 effort to seek them out.Its part of an overall value chain that starts from recruitment,through to management practices,”says Miller.“A newly forming fintech company with a team of just five people doesnt have the same challenges as a large company to achieve the right level of diversity.”A further

230、 issue,Miller continues,is that a traditionally male-dominated finance industry has resulted in banking and pen-sion brands communicating with language and imagery that doesnt appeal to women or is belittling something which Smart-purse and its counterparts aim to reverse.When challenger bank Starli

231、ng analysed 600 stock finance images last year,it found that men are frequently pictured with notes,while women are shown with coins;and men are portrayed signing documents more often than women.But Miller warns it is easy for this same issue to translate to the digital space,with many fintech busin

232、esses still falling short of catering to tailored customer journeys.“Very few of them look at the language,so women still feel excluded.Initiatives like ours and others aim to create a safe MaryLou Costa A 10%pay gap in the UK is shocking enough.But nobody is talking about the fact that the pension

233、gap is 43%E Q U A L I T YNspace where women are welcome to learn about what matters and are not patron-ised,”she says.“Women want an adviser who starts the conversation from what it is that the person wants to do with their money,rather than just pitching the next product.Its hard for the industry t

234、o change.Fintechs can see things differently.”Doing just that also involves building a community,and using the language they use,says Laura Pomfret,who co-founded Financielle in 2018.“We use our customers words in our copy.Women say theyre overwhelmed and intimidated but,at the same,they want to get

235、 their act together.So thats one of the biggest things we say,”Pomfret explains.A lot of fintech companies get this wrong,she adds,by focusing on the solu-tion without understanding and reflecting their customer voice.Financielles online community is also supportive of its members aged over 50,Pomfr

236、et notes,overcoming any tech barri-ers for older users.She gives the example of a member whose partner of 19 years had left her,with no pension or financial security.Getting advice from the community,she worked out what she needed,and found a pension product that suited her and her ideal monthly con

237、tribution.“Now shes completely on track and is helping others with the same problem.The community is the best because theyve seen it all before and help people learn from their mistakes.Its really cool,”Pomfret says.Financielles sweet spot,though,is women aged 25 to 40.Pomfret is adamant that target

238、ing women early and making finance as easy a topic of conversation as wellness or entertainment will resolve the gender pension gap without it becoming the sole domain of fintech.Uzzell,who estimates that around 60%of her all-female client base comes to her with pension concerns,agrees with this ass

239、essment.She elaborates,though,that financial education should be more estab-lished and emphasised in schools,with employers continuing this:“Big corpora-tions have a responsibility.The govern-ment has a responsibility.Schools and educators have a responsibility.And the media has a responsibility to

240、raise aware-ness of the gender pension gap in the same way as they did with the gender pay gap,and make it unacceptable.”THE GENDER PENSION GAP CONTINUES TO WIDENPension savings wealth difference between men and women in the UK at retirement age(65)NOW:Pensions,202210000 Hours via GettyImagesMenWome

241、nPension savings gapWomens pension wealth as a%of mens203%28%34%105,500145,700136,80051,00057,50069,000156,500 203,200205,800Commercial featureWhy embedded finance needs to go beyond infrastructure aloneWhile everyone is focusing on backend services,thats just half the storymbedded financ

242、e has fast become one of the most revolu-tionary movements in the world of finance.Wresting control from tradi-tional banks and putting power into the hands of ordinary businesses,it allows for the democratisation of finance,with all that entails.It has been a change equivalent to the arrival of the

243、 introduction of Amazon Web Services(AWS)for the internet and data handling,reckons Nigel Verdon,co-founder and CEO of Railsr(formerly Railsbank),an embedded finance experience provider.“Beforehand,you had data centres,and it was a real pain,”he says.“You had to buy servers,power supplies,all this s

244、tuff to get you up and running.”Now,it takes 10 min-utes and a credit card.The same is true for embedded finance:what was once a convoluted,complicated process is now easy.“Many,many more people can now participate,”says Verdon.“Whereas before you had to have deep pockets,now price points have come

245、way down,and the speed to market has too.”Its simpler than ever to embed finance whether loans,payments,or a wallet into your existing customer experience.Thats meant a plethora of businesses have popped up to serve the sector,many of them focusing intently on eking out incremental improvements on i

246、nfrastruc-tural innovations.“Most of the market talks about functionality,”says Verdon.But thats not the whole story.The worlds best infrastructure is mean-ingless if the customer experience that users encounter is poor.People need to be able to use financial services that com-panies provide,and fee

247、l confident in the experience.“What we like to think about is that customers are driven by experiences,”says Verdon.He equates it to unboxing an iPhone,where the packaging is almost as important as whats within it,or how you dont just buy a car,you buy financing alongside it and want that to be an i

248、nte-grated experience.Railsrs tools,technology and plat-form enable customers to put finance at the relevant point for their consumers.“Thats what makes a real difference to their customer experience,”says Verdon.The companys position as a full turnkey stack provider means it provides a seam-less so

249、lution,without the need for third party complications,that meets regulatory and user requirements.“We do all the set-tlement,the clearing,the money stuff in the background,so Manchester United or Marks and Spencer or Sainsbury dont have to do it,”says Verdon.“Thats the real dif-ference with us.”To c

250、ompare it to the pre-and post-AWS revolution in data,its the equivalent of not having to deal with Cisco routers any more.Early adopters are beginning to recognise the potential of embedded finance-ena-bled customer experiences.One of those is McLaren,which is working with Railsr on a partnership th

251、at builds end-user loy-alty for both businesses.“The concept is to try and embed finance in esports,”says Verdon.Customers will be able to buy a skin for their car to make it McLaren,earn-ing reward points that can be spent on a McLaren branded credit card in the real world.“Its about developing a b

252、rand new market for the McLaren brand,because its so powerful,”says Verdon.Despite the perceptions,the world of embedded finance isnt about cards and wallets and payments.Its about creating an economic flywheel.“Anybody whos been in Amazon will see drawings of flywheels on the back of napkins,”says

253、Verdon.A business could use rewards to drive customer behav-iour for instance,a sports club has rewards funded by the sponsor that are fed into an official app,and are spent alongside money with sponsors.“Using that data,youre able to then show cause and effect,”says Verdon.“A dollar of sponsorship

254、actually generates$5 of income for the sponsor.Its using the tools of finance to drive these economic flywheels of revenue and engagement.”For more information please E Despite the perceptions,the world of embedded finance isnt about cards and wallets and paymentsThe UK fintech market is known as on

255、e of the most vi-brant and successful in the world.Is 2022 shaping up to be another dynamic year?The global fintech market is ex-pected to triple in size and be worth 380bn in value by 2030.In the UK alone,the sector is expected to em-ploy over 100,000 by 2030.According to Innovate Finances Fin-Tech

256、 Investment Landscape report,the UK ranked second in the world after the US for fintech investments in 2021.It at-tracted almost half of the total invest-ment in Europe,worth$11.6bn(9.46bn).Our preliminary research indicates that we are on track to meet or exceed these global fintech investment leve

257、ls in 2022,with the amount of capital in-vested into fintech globally in Q1 of 2022 being even higher than it was in Q1 2021.We are cautious,however,that geopolitical factors such as the war in Ukraine and the cost-of-living crisis may impact these numbers.What kind of role should the fintech sector

258、 play when it comes to social and communi-ty issues such as the pandem-ic,the cost-of-living crisis or the war in Ukraine?Fintechs are making financial services accessible to the mass-es,enabling customers to save,man-age,grow and understand their money in a more direct and transparent way,contribut

259、ing to a more inclusive and democratic financial ecosystem.Fintechs played a key role in helping all of us navigate through the Covid-19 pandemic.From SME lending to iden-tity verification,from alternative cred-it scoring to AI-assisted chatbots and recommendation algorithms,and from next generation

260、 core banking to simplification of mortgage chains,new entrants and alternative providers have been reshaping financial services to better cater to the consumer.Fintechs also have the opportunity to shift the demographic of talent in the financial services industry.The latest survey by EY and Innova

261、te Finance showed an increased commitment of fintechs to diversity and gender equal-ity and we need to ensure this mo-mentum continues.People are at the heart of innovation.We must do more to promote greater diversity gender,ethnic,racial,socio-economic,LGBTQ+and more across leadership and the finte

262、ch and finan-cial services workforce.Boosting inclusion will inspire more people and prompt bolder innovation.Diversity is especially apt for fintechs,given that many solutions are designed to create a more democratic,inclusive and equitable financial services system.What other issues should be top

263、of fintech leaders minds in 2022?Fintech entrepreneurs,founders and innovators have proven that,by harnessing the powers of technolo-gy,fintech can create a more inclusive and diverse financial services sector.The fintech community understands the critical role that the industry has when it comes to

264、 the ESG agenda.The financial innovation sector has the op-portunity to take a position of global leadership,and create plans,processes,and policies that will shape the future.We are on the brink of a cost-of-living crisis expected to result in the largest fall in living standards since records bega

265、n nearly 70 years ago.This will in-crease debt,erode peoples financial resilience and health,and cause many small businesses to struggle.It is now more important than ever that we har-ness the power of innovation to make our financial systems work better for individuals and SMEs.In October,Innovate

266、Finance will host the second edition of the annual FinTech as a Force for Good summit.Fintech founders,senior government officials,investors,policymakers,reg-ulators,NPOs,NGOs and international hubs will debate key issues facing society and explore how the sector can continue to support a fairer,mor

267、e in-clusive,more sustainable future.To reach such ambitious objectives,the UK must continue to build upon its global leadership.This must be done by industry,regulators and govern-ment working together,creating an en-vironment where innovation can thrive,and demanding better financial services that

268、 work for all.Its more important than ever that we harness the power of innovation to make our financial systems work better for allJanine Hirt CEO,Innovate FinanceI N S I G H T SJanine Hirt,CEO of industry body Innovate Finance,discusses how the sector will continue to grow in 2022 and how it can b

269、ecome a force for goodAQAQAQF U T U R E O F F I N T EC H08budgeting tools is,she says,the best way to make sure that vulnerable groups of society are not left behind.“A greater focus on inclusive product design can help improve the experience for many users,including minimising finan-cial jargon,usi

270、ng plain English to remove unnecessary complexity,and building in accessible features like text-to-speech to these apps,”says Porra.“This way,fintech companies can ensure that everyone is brought along on the digital journey.”Attitudes to budgeting are also starting to change as the cost of living c

271、risis intensi-fies.A Nous survey in February showed fewer than a third of respondents(31%)had discussed the rising cost of living with anyone outside their household.By April,that number had risen to 67%.“People are having conversations about finances that they maybe werent having six months ago,”sa

272、ys Marsh.The severity of the squeeze on incomes and the need to have a better under-standing of their personal finances could mean that,once the current crisis sub-sides,people will remain more engaged with their money.“The cost of living crisis has come as a big catalyst for action,”says Mowbray.“I

273、f we come out of it with more people tuned in to their money,financially aware and not prepared to let big businesses lean on inertia for their profits,it will be some-thing to take from the difficult times that people are dealing with now.”When the going gets tough,the tough get countingharles May

274、runs the local conveni-ence store in Coombe Bissett,a leafy village just outside Salisbury in the south of England.In common with many people across the UK right now,he is feeling the pinch from the rapidly esca-lating cost of living crisis.May is also one of a growing number of people who are turni

275、ng to fintech solutions for help.He uses the budgeting app called You Need A Budget to help him to keep track of his expenses and to navigate the squeeze on his finances,as prices rise at their fastest pace in 40 years.“The biggest impact is inflation.My money is not going as far as it used to,each

276、month.It used to be reasonably easy to save up for something.But now I have less disposable income because I have to spend more on necessities,”he explains.“The app helps me to search out better inter-est-paying accounts to hopefully reduce the effect of inflation on funds held back for future spend

277、ing on tax,for instance and to budget for non-essential spending so that I can get there in the end.”A third of households in the UK were spending more than they earnt even before the pandemic and the cost of living crisis hit,according to the Office for National Statistics.A sky-high energy bills c

278、om-pound the squeeze,households need more help than ever to manage their finances.In response to this,budgeting app Snoop,for instance,has introduced a feature that calculates changes in the cost of living.It helps users to correctly understand the impact of rising costs.“Because inflationary pressu

279、re wont impact everyone in the same way,weve provided customers with personalised breakdowns that show how increased prices and taxes will impact their finances,along with ways to mitigate and offset the pres-sure,”says Scott Mowbray,co-founder of Snoop.“Weve endeavoured to take the cost of living b

280、eyond the headlines and use data to help people identify their own personal inflation figure in pounds and pence.”The app then suggests ways to cushion against the price increases,such as switching to better deals at the right time.Nous is another fintech app that aims to help people to manage the c

281、ost of living crisis.It currently provides a free dash-board that consolidates a users spending,then forecasts how those expenses are likely to change over the next 12 months.The aim is to help users to plan better and avoid sudden financial shocks.A Nous survey in March revealed that two-thirds of

282、households believe their expenses will only increase by a maximum of 1,000 over the next year.In reality,the average working family with two incomes is likely to see a net increase of more than 4,000 once government support has been consid-ered,Nous data shows.“The punishing insight here is that hou

283、seholds dont budget as they should,”says Greg Marsh,founder and CEO of Nous.“Were trying to raise awareness of the scale of the financial tsunami that is facing UK households.”Marsh says just 17%to 25%of households currently plan a budget,with a typical household also missing out on around 800 of po

284、tential annual savings because they are not as engaged with their finances.Not switching car insurance every year,for instance,can mean that policyholders are hit with a loyalty penalty when insurers ramp up prices and count on them not shop-ping around for a better rate.“There are two communities o

285、f house-holds that are exploited by the way large vendors often prey on their inertia the less well-off and the squeezed middle,”Marsh says.The first group on lower incomes tend to be less financially literate and less confident in managing those vendor relationships,while those on middle incomes ar

286、e too busy to keep on top of renewal notices and therefore Consumers are wising up to money management tools to track budgets due to squeeze on incomesBen Edwards Households are missing out on around 800 of potential annual savings because they are not engaged with their finances I N F L AT I O NCHO

287、W IS THE UK COPING WITH THE COST OF LIVING CRISIS?Percentage of British households with spending greater than income and whether they can sustain overspend for a year Office for National Statistics,2022Income greater than spending65%Spending greater than income,can sustain for less than a year16%Spe

288、nding greater than income,can sustain for more than a year19%often let contracts roll over to more expen-sive tariffs.To help tackle this,Nous is building a subscription-based automation tool that will remove the responsibility of the consumer to manage those vendor relationships.“Where necessary,it

289、 will put the boot in if a company is taking advantage of a cus-tomer.Or it will switch you to an alternative vendor when thats appropriate,”says Marsh.“We think the answer to this problem is not to provide people with more budgeting tools but to take the problem away from them.”The challenge,of cou

290、rse,is how to reach those consumers who most need help with budgeting but are less likely to be engaged with their finances.Anna Porra is Euro-pean strategy director at payments com-pany Marqeta.Sharing the benefits of using Raconteurs new campaign product suite gives marketers the best of both worl

291、ds.Email to plan your campaign now.Want the power of print media combined with best in class lead generation?R A C O N T E U R.N E T09SMEs take up short-term credit he past few years have seen buy now pay later(BNPL)become a sta-ple at online checkouts.Since Nove-mber 2021,17 million UK shoppers hav

292、e accessed credit at the point of purchase.This trend is quickly becoming preva-lent in business-to-business payments,with many solutions entering the market and garnering investment.Billie,a Ber-lin-based solution that uses Klarnas tech-nology to offer BNPL at B2B checkouts,recently announced a$100

293、m(83m)investment round.The offer of credit at checkout is as attractive to businesses as it is to consumers.“Part of the appeal of B2B BNPL is that it benefits buyers and sellers,”says Yasamin Karimi,global head of product strategy at Codat,an application programming inter-face provider that helps s

294、mall businesses track their data.“Sellers benefit from embedded process-es,immediate payments and reduced admin as they dont have to worry about reimbursement.Buyers benefit from increased supplier loyalty,reduced risk and avoid the reputational damage associ-ated with making late payments.”But Kari

295、mi points out that BNPL is,essentially,already a widespread factor in B2B transactions.Payment within 30 days is the statutory norm but depend-ing on terms invoices can take up to 180 days to be paid.The appeal therefore also lies in a possi-ble solution to a situation many small busi-nesses have fa

296、ced for years:extended invoice terms and late payments.According to the Federation of Small Businesses(FSB),61%of small companies were impacted by late payment of invoices in Q1 2022.The organisation estimates that 50,000 companies close every year because of late payments.“A worsening late-payment

297、crisis adds to the cash-flow burden on small business-es,”says FSB national chair Martin McTague.“Small businesses are at the same time wrestling with spiralling oper-ating costs,supply chain disruption and a widespread labour shortage.”Even when invoices are paid on time,long payment terms can have

298、 profound effects on cash flow.These terms and con-ditions are generally enforced onto small-er businesses by bigger operations and can prohibit small businesses from scal-ing,as they dont necessarily have the liquidity to invest in new hires,products or marketing.“SMEs have a wild number of issues

299、in this market,”says Jamie Beaumont,CEO of Playter,a B2B BNPL provider.“They cant afford to pay for new talent because theyre not getting paid them-selves.They cant afford to grow the busi-ness.They cant invest in certain sides of their business because they dont have good cash flow.They have to slo

300、w down.”Playter offers SMBs access to funds up to 300,000 each year,in exchange for a yearly subscription fee rather than charg-ing interest.Beaumont describes the ser-vice as a credit facility that allows clients to pay suppliers quickly,and then pay back Playter over six to 12 months.The current e

301、conomic situation has raised serious questions about how con-sumers are using BNPL solutions.According to Citizens Advice,42%of recent BNPL shoppers needed to use credit cards or other forms of lending to pay off their debts.Is this irresponsible borrowing likely to affect businesses?Both Karimi and

302、 Beaumont point out key differences between the two markets.Beyond a credit check,theres little barrier to funds at a consumer checkout.The aver-age spend of B2B transactions tends to be much higher than B2C,therefore requiring a much more stringent underwriting pro-cess that uses better quality dat

303、a.“With access to this data,B2B BNPL providers can overcome many of the chal-lenges typically seen in consumer BNPL,such as poor risk mitigation,huge defaults,and a lack of affordability checks,”says Karimi.Beaumont also points to that fact that consumers make far more purchases online than business

304、es,leading to frivo-lous decisions and more exposure to credit at the point of sale.“Most businesses have different types of expenditure than a consumer,”says Beau-mont.“These are better-informed pur-chases.Theyre already paying for their marketing,recruitment,legal develop-ment,rental software cost

305、s like that.Were looking after business expenditure as a whole,not a single transaction.”There are,of course,still risks.McTague says many small organisations dont have the scope to bring on additional debt due to the significant borrowing taken on since 2020.Bank of England research estimates SME d

306、ebt in the UK has increased by 25%Companies such as Klarna have made it easy for consumers to access credit at the point of purchase online.How does it work in business-to-business transactions and are the risks the same?since the onset of Covid-19.“While BNPL services offer small businesses one pot

307、en-tial option for financing,many small firms have already taken on significant debts,”he says.“The small business community survived the impacts of Covid-19,lock-downs and disruption.But it has done so swimming in debt.They should not have to resort to complicated financial instru-ments to access w

308、hat they are owed.”Karimi offers a warning to both busi-nesses accessing credit and the suppliers of BNPL credit.Part of the appeal of tradi-tional loans is speed but this can create problems for both parties.“Its about balancing risk with rapid decisioning.Small businesses expect speedy decisions,b

309、ut this shouldnt be at the expense of effective risk assessment.Access to real-time data direct from the accounting,banking,and commerce sys-tems that SMEs use is key to mastering this challenging balancing act,”says Karimi.“Businesses should take time to consid-er the decision,be confident in their

310、 ability to repay and ensure they have a thorough understanding of penalties and terms.”Beaumont accepts there is heightened risk for businesses that access BNPL in the current economic climate.While Playter ensures that its clients are financially sol-vent and they“take a stringent view on underwri

311、ting”,this uncertainty,coupled with the nascent processes of B2B BNPL does carry risks.“The B2B world is new.How you under-write a person is much easier than under-writing an entire business.The considerable risk is that you can get it wrong.And businesses generally go into this wanting more.Its eas

312、y to sell money;its difficult to get it back.”Tom RitchiePAY M E N T SCommercial featureTThomas Barwick via Getty ImagesCitizens Advice Bureau,202261%of small companies were impacted by late payments in Q1 2022750,000companies close every year,it is estimated,due to late payments42%of recent BNPL sh

313、oppers had to use credit cards or other forms of lending to pay off their debts The small business community survived the impacts of Covid-19,lockdowns and disruption.But it has done so swimming in debtFederation of Small Businesses,2022he unique pressures on com-panies during the pandemic triggered

314、 a golden age for customer experience.While the initial transition to remote working and a fully digital service model without physical branches was no doubt difficult,the outcomes for trust and loyalty were hugely positive.This was a long time coming,of course,and stay-at-home mandates merely accel

315、erated,albeit very sud-denly,the digital transformation strat-egies that financial services companies have been honing for a decade or more.The digitisation of other consumer ser-vices has recalibrated customer expec-tations,but to keep up financial insti-tutions have first had to deal with their le

316、gacy systems.The extreme circumstances of lock-down forced them to finally make the investments in cloud modernisation required to interact with consumers on their desired terms.A high-touch operating model for acquiring,ser-vicing and advising customers was no longer fit for purpose.At the heart of

317、 investments was a focus on a more fric-tionless customer experience,pow-ered by technologies such as artificial intelligence to facilitate self-service and hyper-personalisation.“As customers have gotten more used to the digital experience offered by non-industry players like Netflix and Amazon,the

318、 question they have often asked is:why cant my bank offer me the same experience?”says Rahul Kumar,senior director of financial services strategy at Talkdesk,a global leader in customer experience solu-tions.“We absolutely saw an increase in the adoption of digitisation,and cloud-based modernisation

319、 of legacy sys-tems,during the Covid-19 pandemic.”“Unable to rely on their physical branches for the first time,financial institutions had to meet customers when and where they wanted to meet with them,on the device of their choos-ing,”says Kumar.“As a result,there has been rapid demand for the emer

320、ging innovations needed to offer the expe-rience that customers are looking for,including digital tools and automation technologies like AI.It may have been out of sheer necessity but it really boosted customer trust and loyalty.”The return to pre-pandemic behav-iours,however,appears to have caused

321、some complacency.Assured by their Covid-era enhancements,along with the return of physical branches,many companies feel they can handle additional call volumes while also serving customers across digital chan-nels without further investment.Such complacency could harm them in the long run.The impact

322、 is already being felt.A recent report by a leading CX analyst found customer experience quality has fallen back to early 2020 levels,revers-ing gains made in 2021.Meanwhile,customer trust in banks fell for the first time since 2018.A separate study by Talkdesk found that seven in 10 customers are m

323、ore loyal to financial services companies that are actively investing in customer experi-ence and accelerating their pace of inno-vation.However,expectations are failing to be met,in large part because banks are using traditional contact centre solu-tions which are not built specifically for financi

324、al services firms.“The pandemic forced people to break their routines and come out of their comfort zones.Crucially,they no longer needed to maintain loyalty with a bank just because it was the clos-est branch to their home or on their commute to work,”says Bhavana Rana,director of product and indus

325、try mar-keting,financial services and insurance,at Talkdesk.“That caused a change in customer behaviours and,naturally,warranted quite urgent investments in customer experience.”“Customer loyalty was up for grabs.If an organisation did not quickly adapt to the changing behaviours,theyd very quickly

326、lose customers,”Rana continues.“But now,with continued supply chain issues and volatility in the market,the focus seems to be shifting more towards cost-saving measures,with less emphasis on customer expe-rience.Thats a mistake.Reverting to the old way of doing things will alien-ate customers.Financ

327、ial services firms must continue to use customer experi-ence as a strategic asset.”Talkdesk,whose automation-first cloud-native contact centre solu-tions optimise the customer experi-ence,has been working with financial services institutions to help leverage their CX learnings from the pandemic and,

328、importantly,maintain momentum.Last year,it launched the first enter-prise-grade contact centre platform built specifically for financial services firms.Talkdesk Financial Services Experience Cloud enables banks,credit unions and insurers to deliver connected,intelligent and secure interactions more

329、effortlessly,across any communication channel.The modern,unified customer expe-rience platform is tailored to meet financial services needs,with features and functionalities that support essen-tial industry workflows and bespoke AI models that solve specific issues within the financial sector.The pl

330、ug-and-play solution includes pre-packaged indus-try integrations,significantly acceler-ating the timeline for any digital trans-formation happening in the financial services industry,enabling organisa-tions to realise value from investments in days rather than years.An innovative contact centre sol

331、u-tion designed to address banks and insurers top customer service prior-ities,such as account servicing,lend-ing,policy servicing and claims,will be vital as customers continue to expect hyper-personalised experiences accessible immediately on the device and channel of their preference.“The pandemi

332、c challenged the tra-ditional ways that financial institutions operated,and its crucial now that banks take those learnings forward rather than leave them in the past,”says Kumar.“To differentiate them-selves going forward and explore new business models,such as embedded finance,companies need to fi

333、rst ensure they are engaging how their customers want.Investing in a modern CX platform will allow them to deliver a connected,cohesive experience,irrespective of where the interaction starts and where it then travels.”Rana adds,“One thing that has been constant through all of the upheaval is our need for a human connection.Customers will always seek conveni-ence and value offered through digi-tal