Information and Analytics about Embedded Finance, BaaS and Open Banking

In a comprehensive global study commissioned by banking software firm Temenos, conducted by ‘Economist Impact,’ it has been emphasized that banks must adapt to disruptive technologies and actively engage in digital ecosystems to retain their relevance in the evolving financial landscape, as highlighted in The Fintech Times. Surveying 300 banks worldwide, the study, titled ‘Byte-sized banking: Can banks create a true ecosystem with embedded finance?,’ underscores the need for banks to reevaluate their roles in response to growing competition from payment companies, technology disruptors, and e-commerce players offering embedded finance solutions. One of the major driving forces behind this transformation is the increasing demand for personalized financial products and services. Fintech companies, due to their agility, are often better positioned to meet these consumer expectations. The report highlights that approximately 79 percent of surveyed banks anticipate banking to become an integral part of consumers’ lives and businesses’ value chains. Moreover, the study found that a significant portion of banks envisions their future business models shifting towards offering banking-as-a-service (BaaS) to brands and fintech companies while enabling embedded finance within their own offerings. Almost twice as many banks aim to preserve their consumer-facing experiences and establish themselves as genuine digital ecosystems. Interestingly, the survey reveals that new technologies are poised to have a more substantial impact on banks in the next five years than customer demands or regulatory changes, with 63 percent of respondents concurring. A CEO from one of the surveyed banks emphasized, «If you do not have modern technology, younger generations will not bank with you, it doesn’t matter how long you’ve been around.» Moreover, a significant majority, 71 percent, believe that unlocking value from artificial intelligence (AI) will be the primary factor distinguishing successful banks from their competitors, with generative AI projected to drive banking innovations, as acknowledged by 75 percent of respondents. Jonathan Birdwell, the global head of policy and insights at Economist Impact, emphasizes that maintaining a direct connection with consumers compels banks to transform into true digital ecosystems. He also predicts that customer-centricity will lead banks to offer more embedded environmental, social, and governance (ESG) and sustainable banking solutions. Collaboration with fintech firms and technology providers is viewed as essential for banks seeking expertise in emerging technologies. The study suggests that relationships within the industry are expected to evolve in the coming years, with 44 percent of respondents anticipating banks acquiring majority stakes in fintech companies, and 32 percent foreseeing market consolidation among challenger banks within the next one to three years. Kanika Hope, Chief Strategy Officer at Temenos, echoes the study’s findings, stating that «Banks need to tap expertise in new technologies like cloud and AI as well as collaborate with fintechs and technology companies to offer embedded finance as well as to build digital ecosystems.» Furthermore, the report underscores that public cloud adoption is gaining traction, with 51 percent of respondents believing that banks will cease to own data centers in the next five years. Environmental concerns, along with business agility, efficiency, and security, are cited as driving forces behind the accelerating shift to the cloud within the banking sector.

Curve, the versatile all-in-one card app, has taken a significant step forward by integrating PayPal into its comprehensive array of payment options, according to Fintech Global News. This collaboration between Curve and PayPal promises a more seamless and rewarding experience for users in the realm of digital payments. One of the key highlights of this partnership is that customers can now earn cashback on their PayPal transactions and accumulate it within their Curve Cash balance. This accumulated cashback can be utilized for immediate spending or saved for a special treat, giving users greater financial flexibility and rewards for their purchases. Perhaps one of the most appealing features of this integration is the effortless connection it provides. Users can directly link their personal or business PayPal accounts to Curve without the need to input additional account, debit, or credit card details. Once connected, they can designate PayPal as their preferred payment method for both in-store purchases and contactless transactions, effectively expanding the reach of PayPal into the Point of Sale arena. Shachar Bialick, the founder and CEO of Curve, expressed his enthusiasm for this partnership, stating, «Our work with PayPal takes us another step further to unlock new opportunities for digital payments and also cements our position as one of the most consumer-centric financial products in anyone’s wallet or cellphone.» In a remarkable display of financial strength, Curve recently secured an additional £58 million extension of its Series C round, bringing its total funding to over £133 million. This extension, one of the largest funding rounds of 2023, is expected to empower the London-based FinTech company to enhance its app’s overall customer experience, expand its Flex offerings, and introduce exciting new partnerships to the market. Notable participants in this extension round include Britannia, IDC Ventures, Cercano Management (the venture arm of Microsoft co-founder and philanthropist Paul G. Allen’s estate), Cohen Circle, Outward VC, as well as numerous existing shareholders. This collaboration between Curve and PayPal marks a significant milestone in the evolution of digital payments, offering consumers greater convenience and rewards while propelling Curve further into the forefront of innovative financial products.

In an exciting development for iPhone users in the UK, Apple has quietly rolled out a groundbreaking integration of its Wallet app with the country’s open banking framework, as outlined in Finextra News. This move is poised to revolutionize the way people manage their finances on their iPhones. Initially reported by 9ToFiveMac, this innovative integration brings new functionalities to the Wallet app. Users will now have the ability to conveniently view their current account balance directly under their card image, alongside a detailed transaction history that includes deposits and payments. What’s more, this feature extends to both credit and debit cards, providing a comprehensive financial snapshot right at the user’s fingertips. One of the most exciting aspects of this integration is its seamless integration with Apple Pay. When making purchases using Apple Pay, users will see their account balances displayed inline. This real-time insight can help individuals make more informed decisions about their spending habits, promoting financial responsibility. The rollout of this integration will commence with the upcoming iOS 17.1 developer beta, as reported by 9ToFiveMac. Initially, this feature will be accessible to a select group of Wallet app users in the UK who possess an Apple Pay credit or debit card linked to one of the supporting banks. The list of supporting banks during the initial phase includes some of the UK’s major financial institutions, such as Barclays, HSBC, Lloyds, RBS, Monzo, and Starling. These partnerships reflect Apple’s commitment to ensuring a smooth and secure transition into open banking for its users. Apple’s integration of the Wallet app with the UK open banking framework represents a significant leap forward in the realm of personal finance management. With the power of real-time account balance updates and transaction history at their disposal, users can make more informed financial decisions, ultimately leading to greater financial responsibility.

ManhattanLife Group, an esteemed presence in the American insurance sector, has forged a strategic partnership with Health In Tech, a prominent self-funded health plan quoting platform. This collaboration marks a significant milestone in the healthcare insurance industry as these two influential entities unite to offer an extensive range of health coverage products to their clientele, as highlighted by Fintech Global News. The core objective driving this alliance is the unwavering commitment to meeting and exceeding the evolving needs of their clients. By joining forces, ManhattanLife Group and Health In Tech aim to diversify the array of health coverage solutions provided by the latter, thereby reinforcing their dedication to offering comprehensive and versatile options for individuals seeking robust insurance protection. ManhattanLife Group has earned its place as a venerable institution within the American insurance landscape by consistently delivering a wide spectrum of insurance products tailored to meet the unique requirements of their customers. In contrast, Health In Tech is a dynamic player in the self-funded health plan quoting platform sector, renowned for its agility in adapting to the changing demands of its clientele. As a direct outcome of this collaboration, Health In Tech is poised to introduce a suite of new products, encompassing Critical Illness, Accident, Dental, Vision, Term Life, and GAP coverage. These products are meticulously designed to assist policyholders in diverse situations, whether it involves securing financial benefits following a diagnosis of a critical illness or ensuring unrestricted access to dental care. Health In Tech’s CEO, Tim Johnson, expressed his enthusiasm for this partnership, stating, «At the heart of our mission lies the commitment to surpass our clients’ expectations while continuously adapting to their evolving requirements. We are privileged to collaborate with ManhattanLife, a venerable institution in the American insurance landscape, in delivering crucial healthcare products. This expansion of our product range not only enhances our portfolio but also reaffirms our unwavering dedication to furnishing a comprehensive and diverse array of health coverage options.» The collaboration between ManhattanLife Group and Health In Tech represents a significant stride forward in the healthcare insurance sector. It underscores their shared commitment to innovation and client-centric solutions, promising a brighter future for individuals seeking comprehensive and adaptable health coverage options.

In a bid to fortify the security of digital financial services in Australia and New Zealand, Backbase, the renowned engagement banking firm, has announced a strategic partnership with FrankieOne, a leading Australian identity verification and fraud prevention platform provider. This collaboration aims to facilitate seamless customer onboarding for banks and credit unions in the region by combining Backbase’s personalized banking experience platform with FrankieOne’s robust identity verification solutions, according to The Fintech Times. The need for such a partnership has become evident as recent statistics from the 2023 Australian Payment Fraud Report, released by the Australian Payments Network, unveiled alarming figures. In 2022, fraud on payment card transactions surged by 16.5 percent compared to the previous year, totaling a staggering $577 million. This increase in fraudulent activity coincided with a 16 percent rise in total spending on cards, reaching an astonishing $1 trillion during the same period. The fraud rate on Australian card payments, although marginally increased from the previous year to 57.5 cents per $1,000 spent, underscores the growing threat of fraud in the region. Confronted with escalating levels of fraud, consumers have heightened their awareness of the critical importance of secure digital banking. Fraudulent activities are costing Australian consumers billions of dollars, making the need for enhanced security paramount. Elliott Haralambous, the Director of Partnerships and Alliances at Backbase, expressed his enthusiasm for the collaboration, stating, «As pioneers in the digital banking space, this partnership will bring a new level of innovation to the Australian and New Zealand banking sector. This collaboration enables us to offer seamless digital experiences while maintaining the highest standards of security and compliance.» The Backbase and FrankieOne partnership aspires to furnish local financial institutions with increased trust throughout customer onboarding processes. It is anticipated that this joint effort will lead to higher customer loyalty within the local banking industry and a simplification of compliance requirements. Backbase’s engagement banking platform now gains access to FrankieOne’s comprehensive suite of offerings, including Know-Your-Customer (KYC), Anti-Money Laundering (AML), biometric verification, transaction monitoring, fraud detection, and compliance capabilities, drawing from a carefully curated selection of both local and international providers. In addition to this strategic collaboration, Backbase has recently introduced its Engagement Banking Cloud (EBC) offering, presenting customers with a unified platform that extends across all lines of business and supports the complete customer lifecycle through seamless customer journeys. In the face of evolving threats in the digital financial landscape, the Backbase and FrankieOne partnership seeks to fortify the security and trustworthiness of Australia and New Zealand’s financial institutions, ultimately ensuring a safer and more secure digital banking experience for all.

Know Your Customer (KYC) processes have long been an essential component of the onboarding process in the financial world. However, the financial industry is now contemplating the shift towards automated KYC processes. In a recent discussion highlighted in Fintech Global News, industry experts delved into the potential of automated KYC to foster financial inclusion. Lleida.net European Chief Operations Officer, Patricia Fernandez-Trapiella, Bureau van Dijk Director of GRC Solutions, Ted Datta, and Santander’s Former Head of Due Diligence, Sanchit Langar, engaged in a thought-provoking conversation on this subject. As the concept of perpetual KYC gains momentum, the question arises: can automated KYC surpass manual KYC in its ability to promote financial inclusion? Ted Datta posed a critical question, stating, «The whole idea is why? What are the incentives to do this? If you think about KYC data on companies, why do companies file at Companies House in the UK? Well, to get a bank loan and so they have a presence. There is a whole cycle of inclusivity. You need, in any system, to work there needs to be an incentive for all participants, it needs incentives for people to register their data or fill it in accurately at the point of creation, it needs incentives for market participants.» Datta emphasized that the existence of automated KYC on a broader scale is integral to its success. With the increasing complexity of fraud and financial crime, KYC processes must evolve to become more detailed. This naturally raises the question of whether more extensive automation in KYC is the way forward. As financial institutions grapple with the demands of regulatory compliance and the fight against financial crimes, the role of automated KYC in streamlining these processes becomes increasingly evident. The discussion around automated KYC processes and their potential to enhance financial inclusion is a topic of utmost importance in today’s financial landscape. As KYC procedures continue to evolve and adapt to the changing dynamics of the industry, the adoption of automated KYC may hold the key to a more inclusive and secure financial ecosystem.

Singapore-based fintech platform, Starfish Digital, has joined forces with the renowned international banking group, Standard Chartered, in a groundbreaking partnership set to transform the landscape of real-time cash management for corporate clients, according to Fintech Global News. The primary objective of this collaboration is to introduce a cutting-edge multibank connectivity service that will significantly enhance the ability of Standard Chartered’s corporate clients to establish rapid and seamless connections between their systems and multiple banking relationships. The ultimate goal is to streamline and automate cash management processes, offering corporate entities real-time visibility and control over their cash reserves, thereby bolstering their working capital management strategies. At the core of this initiative is Starfish Digital’s innovative software-as-a-service platform, Starfish Connect. This platform acts as a bridge, facilitating connections between various corporate finance, ERP, and treasury management systems and corporate banking services. By integrating with Starfish Digital, Standard Chartered expands its portfolio of API offerings, empowering corporate clients with crucial insights required to reconcile account balances, track transactions, and facilitate payments efficiently. This strategic partnership marks a significant milestone as it represents the first collaboration of its kind for Starfish Digital with a global financial institution. It underscores the growing demand for digital corporate banking solutions that not only reduce costs but also enhance capital and process efficiencies, minimize risks, and provide timely business insights. Through this partnership, Standard Chartered aims to guide its clients toward embracing real-time treasury practices, leveraging the potential of APIs and Open Banking. Janet Thomas, the Global Head of Strategic Platform Partnerships at Standard Chartered, commented on the partnership, stating, «We’ve listened to the needs of our multinational corporate clients, who seek a seamless solution to digitize all their banking relationships. They desire a comprehensive view of their cash positions and more accurate cash flow forecasting. Our collaboration with Starfish Digital addresses this demand by offering a plug-and-play solution that delivers a real-time treasury experience. This complements our growing suite of business-critical APIs, available through aXess, our open banking platform.» Patrick Huang, CEO of Starfish Digital, expressed enthusiasm about the partnership, saying, «We are delighted to collaborate with Standard Chartered to provide automated, real-time, digital banking solutions for corporates. There is a significant demand for such services, particularly among companies engaged in real-time payments and forward-thinking CFOs who are keen to future-proof their businesses in an ever-evolving payments ecosystem.» The partnership between Starfish Digital and Standard Chartered represents a pivotal moment in the evolution of corporate banking, emphasizing the crucial role of digitization, efficiency, and real-time insights in today’s fast-paced business environment. Corporate clients can now look forward to a more streamlined and automated cash management experience, ensuring better control and optimization of their financial operations.

In the world of financial technology, fintech, innovation has the power to empower individuals, promote transparency, and enhance efficiency. However, recent years have witnessed a disconnect between fintech’s potential and the actions of its prominent players. As we navigate an era filled with economic challenges, it is imperative for fintech innovators and investors to realign with the core values of their technologies, rekindling the industry’s promise and rebuilding trust. Below is the path to reclaiming fintech’s value system, highlighted by Yuval Brisker at TechCrunch. A glance at recent fintech controversies, from crypto fluctuations to meme trades and the FTX debacle, reveals a frustrating truth. Many of these incidents involved applications and business models that held immense potential to make a positive impact. The rise of cryptocurrencies and blockchain technology, designed to usher in transparency, trust, and resilience in financial transactions, suffered a significant reputational hit due to the actions of a company, FTX, which subverted these very ideals. In today’s landscape, the term «social finance,» synonymous with financial empowerment through innovation, has become intertwined with Reddit traders, Robinhood, and the GameStop short squeeze. Meanwhile, fintech founders receive little recognition for enabling young people to open retirement accounts. The irony reached its peak when Silicon Valley Bank, known for backing over 70% of fintech IPOs between 2020 and 2022, fell victim to America’s first-ever fintech-enabled bank run, raising questions about the efficiency of markets. Given these challenges, it is no surprise that federal bank regulators have made it exceptionally difficult for fintech companies to obtain a bank charter. To revive the industry’s tarnished reputation, fintech companies must seize the opportunity presented by the current economic climate and focus on applications that mitigate the impact of inflation and financial uncertainty on workers and consumers. Here are three crucial areas where financial technology can lead the way: Empowering Individuals through Smart Financial Choices One innovative approach is the concept of «buy now, pay later» (BNPL), which enhances consumers’ purchasing power during online transactions. Some companies are reimagining the traditional «layaway plan.» Consumers can set aside funds for desired purchases, accumulating the full purchase price over time. This technology also enables employers to offer their workers higher interest rates, allowing them to allocate a portion of their salary, which they may not immediately require, into an account yielding 4% or more. For individuals lacking high-yield accounts, this service can make a substantial difference. Importantly, if they find they cannot proceed with the purchase, they will have saved money and avoided the predatory terms often associated with BNPL services. Fostering Financial Literacy through Technology The social finance backlash has highlighted the importance of coupling empowerment with education. Fintech companies, often operating in the hybrid fintech/edtech space, are pioneering improved financial literacy and education models and technologies—a subject frequently overlooked in traditional education systems. Innovative incentive models are central to these emerging players. Companies like Austin-based Zogo collaborate with financial institutions to deliver short-form financial education content, offering tangible incentives to make learning accessible and rewarding. Furthermore, organizations like the School of New Africa (SONA) are developing gamified learning platforms, combining African history, culture, language education with financial literacy instruction. Fintech has the potential to be a powerful force for good in the financial world, promoting empowerment, transparency, and efficiency. To realize this potential, fintech innovators and investors must return to the fundamental values that underpin their technologies. By refocusing on applications that address the pressing economic challenges faced by individuals and emphasizing financial education, the fintech industry can regain the trust it needs to fulfill its promise. In this endeavor, fintech leaders should remember that their actions today will shape the financial landscape of tomorrow, creating a world where everyone can access the benefits of modern financial technology.

«European policymakers have laid important foundations and infrastructure, in PSD2 and SEPA Instant, for faster, secure, and more cost-effective payments experiences for customers and businesses. But more work is needed.» — Joe Morley, EU CEO, TrueLayer Open banking has emerged as a pivotal catalyst for driving the widespread adoption of instant payments in Europe, with only 14.2 percent of euro credit transfers currently being processed through SEPA Instant, the Pan-European real-time payment system, as reported by TrueLayer, a leading payments network, writes Francis Bignell for The Fintech Times.  TrueLayer’s latest report, titled «Payments in the EU — Building better user experience through open banking & SEPA Instant,» outlines a strategy to enhance the synergy between open banking and instant payments. This strategy is attributed to the evolving regulatory landscape, encompassing the Payments Services Regulation (PSR) and Instant Payments Regulation (IPR), as well as consumer preferences favoring manual bank transfers. TrueLayer asserts that open banking technology can facilitate SEPA Instant’s capability to enable merchants to accept instant payments for goods and services. Crucially, the report emphasizes the importance of enhancing user experiences by eliminating hurdles in the consumer’s open banking payment journey. It also recommends that keeping the cost of fees for instant payments low is essential. Furthermore, TrueLayer advocates for granting fintech companies access to payment systems on a fair and non-discriminatory basis, a move expected to foster competition in the market. One of the report’s major recommendations is the elimination of IBAN (International Bank Account Number) discrimination. This measure is anticipated to create a genuine single European payments market. Commenting on the report, Joe Morley, EU CEO at TrueLayer, stated, «European policymakers have laid important foundations and infrastructure, in PSD2 and SEPA Instant, for faster, secure, and more cost-effective payments experiences for customers and businesses. But more work is needed.» Morley emphasized the need for the EU to keep pace with global developments, citing the success of Pix payments in Brazil, which now surpasses both credit and debit card payments combined. He called for a modern, open, and dynamic payment system that fosters competition and benefits consumers and merchants alike. Morley underscored the importance of finalizing the Instant Payments Regulation and directing open banking changes in the Payments Services Regulation towards enhancing user experiences. He believes that these initiatives, when combined, will lead to the creation of a domestic payment method that Europe has been seeking, providing an alternative to the current card duopoly. TrueLayer’s report and recommendations offer a comprehensive blueprint for achieving this vision, with a commitment to collaborating closely with EU policymakers in the months ahead to turn this vision into reality.

In the fast-paced world of fintech, where innovation and disruption reign supreme, a new acronym is taking center stage: ESG, which stands for Environmental, Social, and Governance. Gihan Hyde, the founder, and CEO of CommUnique, explains why fintech companies should not ignore the significance of ESG and how it can revolutionize the industry in Fintech Futures. ESG is not just another buzzword to impress colleagues during meetings; it represents a fundamental shift in how fintech firms operate. Hyde makes a compelling case for why fintech should embrace ESG principles rather than leaving them to traditional financial institutions. Fintech is synonymous with efficiency, transparency, and a commitment to doing things differently. However, in the aftermath of the 2008 financial crisis, public trust in the financial sector was shattered, leading to widespread skepticism about opaque financial practices. Hyde argues that fintech firms can differentiate themselves not only through flashy user interfaces and low fees but also by integrating ESG principles into their core operations, giving them a competitive edge in the digital space. Hyde highlights the value of ESG in fintech, focusing on risk mitigation as a pivotal aspect. Ignoring ESG principles can lead to software glitches, regulatory penalties, negative publicity, and a loss of user trust. ESG isn’t solely about environmental concerns; it’s also about safeguarding a fintech brand from potential disasters. Moreover, embracing ESG can help fintech firms attract and retain customers and investors. In an era where customer acquisition costs fluctuate unpredictably, brands that embody ethical and sustainable values hold a unique allure. Hyde underscores that employees, customers, and investors are more likely to gravitate towards fintech companies that genuinely commit to ESG principles. For fintech firms looking to embark on this transformative journey, Hyde provides a roadmap: Delve into the Digital World: Start with a comprehensive ESG assessment and analyze your firm’s digital carbon footprint. Review partnership agreements for clauses related to social responsibility. Shift Your Strategy: Integrate ESG objectives into your business roadmaps from the outset, rather than treating them as an afterthought. Engage and Enchant: Connect with stakeholders, host «Ask Me Anything» (AMA) sessions on your platforms to discuss ESG goals, and be open to innovative feedback from the fintech community. Monitor and Match: Given fintech’s data-driven nature, treat ESG metrics with the same importance as daily active users or conversion rates. Regular reviews are essential to demonstrate genuine commitment. Educate and Elevate: Foster continual learning by organizing webinars or workshops about ESG for your employees. Bring in certified experts and consider creating gamified apps focused on ESG education. Hyde emphasizes that the winning formula for fintech lies in the fusion of technology with ESG principles. Fintech firms are uniquely positioned to lead the charge by utilizing AI to predict ESG-related risks and analytics to measure the social impact of investments. Gihan Hyde passionately urges fintech enthusiasts not to view ESG as a mere buzzword but as a critical strategy and differentiator for their brands. As fintech reshapes the financial landscape with technology, embracing ESG ensures a sustainable and ethical future. Hyde’s message is clear: let’s ensure fintech stands out not just for its disruptive technologies but also for its unwavering commitment to creating a better world. It’s time for fintech to swipe right on ESG and make a match made in heaven.